Andean Group - April 2011 (ISSN 1741-4466)

Ecuador's economy is finally showing signs of a recovery. GDP increased by 3.58% in 2010, low by regional standards; indeed, only Venezuela was lower among South American nations. But fourth-quarter growth was 6.98% year-on-year and 2.64% on the third-quarter, the fastest rate of growth in the final quarter since 2007. The growth was led by construction and fishing, the central bank reported.
The economic policy minister, Katiuska King, boldly predicted that Ecuador would probably surpass the 5.06% GDP growth forecast in the budget for 2011 as conflict in the Middle East keeps crude prices high. The budget was predicated on an average oil price of US$73.3 per barrel, which had seemed optimistic but now eminently achievable, and a tax take of US$9.5bn, nearly 40% up on 2009. This is ambitious to say the least, but if the economic recovery picks up pace, and the government steps up its efforts to stamp out tax evasion, it might be met. This still leaves the problem, however, of financing a projected fiscal deficit of US$4.95bn.