Ecuador’s Economy: A Mixed Picture

Recovery from Pandemic Slows Down

The International Monetary Fund (IMF) has released a report on Ecuador’s financial sector and economy, highlighting some key points that can be inferred:

• Recovery from COVID-19: After a sharp contraction in 2020 due to the pandemic and a fall in oil prices, Ecuador’s economy has somewhat recovered.
• Slowing Down Economy: However, the economy is now slowing down, with real GDP growth moderating to 0.7 percent in the first quarter of 2023.

Inflation and Financial Sector Stability

• Inflation Eases: Inflation peaked at 3.5 percent in 2022 but has since eased.
• Financial Sector Remains Stable: The financial sector has remained stable, with banks’ average capital ratios around 15 percent of risk-weighted assets as of end-2022.

Challenges Ahead

• Credit Cooperatives Face Higher NPL Ratios: Credit cooperatives have higher non-performing loan (NPL) ratios and lower loan loss provisions than private banks.
• Addressing Challenges: The report suggests that while Ecuador’s economy has made progress in recovering from the pandemic, there are still challenges to be addressed.