The International Monetary Fund (IMF) has upgraded its 2016 economic forecast for Ecuador, predicting a contraction of -2.3% instead of the -4.5% predicted two months ago. The revised number is in line with Ecuador Central Bank’s prediction of -1.7%.
The IMF says the change was prompted by improving economic indicators that suggest the country will emerge from recession in 2017. It has also changed its mind that Ecuador would not be able to tap international funding sources to cover its budget deficit. Since the April 16 coastal earthquake, the country has secured more than $2 billion in loan offers, including almost $400 million from the IMF.
Both the IMF and the Central Bank agree on the causes of the downturn: the collapse of international oil prices, a strong U.S. dollar, and the earthquake.
Ecuador President Rafael Correa welcomed IMF’s upgrade, but criticized the agency for engaging in “astrology, not economics.” He questioned the methodology that required an almost 100% correction in a period of two months. “They said we would not be able to recover from the earthquake but now they see the progress and our access to funding,” he said.
Central Bank director Diego Martinez attributed the discrepancy in IMF predictions and the bank’s to the IMF’s lack of “fresh data.” The bank predicts a gross national product for 2016 of $96.2 billion.