Ecuador’s economy experienced a contraction of 2.0% in 2024, as reported by the Central Bank of Ecuador. The decline was primarily driven by reductions in household consumption, government spending, and gross fixed capital formation (GFCF), which fell by 1.3%, 1.2%, and 3.8% respectively. Despite these declines, exports grew by 1.8%, partially offsetting the contraction, while imports increased by 1.7%.
In terms of industry performance, five out of twenty sectors showed positive annual growth: agriculture, livestock, and forestry (3.1%), financial and insurance activities (1.3%), real estate activities (1.3%), health and social assistance (0.3%), and food manufacturing (0.2%).
The economic challenges faced in 2024 were attributed to both internal and external factors such as security issues, political uncertainty before the upcoming elections in 2025, the progressive closure of oil wells in Block 43-ITT, and the most severe drought in six decades. The Central Bank estimates that power outages due to the drought caused losses amounting to USD 1.916 billion or -1.4% of GDP impact.
In the fourth quarter of 2024 alone, GDP decreased by 0.9% year-on-year compared to the same period in 2023 because of GFCF (-2.6%), government spending (-0.8%), and rising imports (3.7%). Exports rose by 3.5%, while household consumption saw a slight increase of 0.2%. However, there was a modest recovery compared to the previous quarter with a growth rate of 1.3%, fueled by strong performances from GFCF (3%), exports (2.6%), and household consumption (1.5%).
Looking ahead to this year, the Central Bank forecasts a rebound for Ecuador’s economy with projected growth at around 2.8%. This anticipated recovery is expected to be supported by improved credit conditions boosting household consumption, robust non-oil export performance particularly from non-traditional products and agriculture sector contributions alongside increased public-private investment amid greater macroeconomic stability following structural reforms approval.
Nonetheless significant challenges remain including security concerns along with fiscal pressures coupled with potential global recession risks due mainly due sharp oil price declines linked tariff impositions globally.
The publication adheres strictly towards policy guidelines governing dissemination national accounts data noting preliminary figures released now will have provisional updates December next year followed final comprehensive release thereafter another subsequent year later.
