Ecuador First-Quarter GDP Expands 0.33% as Oil Revenue Slumps on 'Boycott'
Ecuador’s gross domestic product expanded for a third straight quarter as growth in non-oil industries helped compensate for the steepest decline in oil revenue since 2007.
GDP expanded 0.33 percent in the first quarter from the previous three-month period and 0.6 percent from the same period a year earlier, the central bank said in a report published on its website.
President Rafael Correa yesterday said revenue from oil, which represents about a quarter of the South American country’s economy, had fallen because private oil companies were holding a “species of boycott” against the government. Ecuador is forcing oil companies to renegotiate contracts to give the state greater control over output. Oil revenue slumped a year-on-year 9.6 percent in the first quarter, while Ecuador’s non-oil sector expanded 2.39 percent.
Central bank President Diego Borja last week said the economy has a “growth problem” and won’t meet the government’s 6.8 percent estimate this year because of lower-than-forecast public spending. Almost six months into the year, the government has spent only about 25 percent of its $21.3 billion budget.
The extra yield investors demand to hold Ecuadorean dollar bonds instead of U.S. Treasuries narrowed 0.02 percentage point to 9.98 percentage points as of 10:50 a.m. New York time, according to JPMorgan’s EMBI+ index. Ecuador’s spread has widened 2.28 percentage points this year, compared with 0.58 percentage point for the index. Ecuadorean sovereign debt is the second-riskiest after Venezuela’s among 15 emerging markets tracked by JPMorgan.
To contact the reporter on this story: Nathan Gill in Quito at ngill4@bloomberg.net
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