Ecuador's economy will emerge from recession in 2017, reaching0.1% growth y-o-y amid oil export gains and public spendingincreases. Private consumption and investment will remain weak,limiting the pace of growth.
We expect Ecuador to post a narrower current account surplus in2017, as import growth outpaces that of exports.
The legacy and policies of Rafael Correa's Alianza PAIS (AP) willcontinue under President Lenín Moreno, who narrowly defeatedcentre-right opposition candidate Guillermo Lasso in a second-roundpresidential election. The AP, however, has emerged with a weakermandate and fewer seats in the National Assembly, which will hinderpolicy formation.
Elevated social unrest surrounding the government's push to increaseinvestment into the mining sector will continue to weigh on popularsupport for the AP as well as the government's ability to attract investmentin an effort to diversify the economy outside of the oil sector.
Major Forecast Changes
We have revised up out forecast for economic growth in 2017 to0.1%, from a contraction of 0.4% previously.