Country Forecast Ecuador December 2012 Updater

Country Forecast Ecuador December 2012 Updater

Overview

Ecuador is currently enjoying a period of relative political stability. With a presidential election scheduled for February 2013, the president, Rafael Correa, remains far more popular than his recent predecessors. An opinion poll in October put his support at 44%, well ahead of his closest rival, Guillermo Lasso, a former banker, at 18%. In view of this, the Economist Intelligence Unit feels that Mr Correa is best placed to win another term. We expect his administration to maintain an expansive policy stance in 2013-17 and to continue its ambitious programme of public investment and infrastructure upgrading. The government will continue to encourage private investment. However, persistent intervention by the authorities will act as a deterrent, as will the unpredictable policy environment. We expect the current account to remain in deficit during the forecast period.

Key changes from last month

Political outlook

With less than three months until the 2013 presidential election, we expect Mr Correa to win another four-year term.

Economic policy outlook

The administration is likely to maintain an expansive policy agenda over the medium term, although spending will be constrained by easing oil prices.

Economic forecast

We expect real GDP growth to moderate from recent levels in 2013-17, to an annual average of 4.6%, as the government struggles to increase public spending much further.

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