According to the World Bank, Ecuador is the second-fastest growing economy in South America this year

RIO DE JANEIRO, BRAZIL – The World Bank expects Ecuador to grow 4.3% in 2022, a much more generous expectation than that of the country’s central bank, which last week announced GDP growth of 2.8%. It also expects Ecuador’s economy to grow 3.1% in 2023 and 2.9% in 2024.

Ecuador’s performance will be very close to that of its neighboring countries, with Colombia growing by 4.4% and Peru by 3.4%. A significant change compared to 2021, when the Peruvian economy closed at 13.3% and Colombia’s at 10.6%.

Read also: Check out our coverage on Ecuador

For the central bank’s general manager, Guillermo Avellán, it is not impossible for the economy to do better than the 2.8% projected for this year. “We at the central bank believe it is necessary for the public and private sectors to join forces to achieve economic growth of 4.04% by 2022, in order to restore production levels, create quality jobs and contribute to reducing poverty in our country,” he said during the presentation of the national accounts last week.

The ECB manager expected the new growth forecast for the economy to be released on Sept. 15 and to take into account the impact of the war in Ukraine, as well as the rise in oil prices and other external shocks.

REGIONAL GROWTH AMONG THE LOWEST IN THE WORLD

After a 6.9% recovery in 2021, the World Bank expects the region’s GDP to grow by 2.3% this year and by another 2.2% in 2023, with most countries recovering GDP losses incurred during the pandemic crisis.

However, with these modest forecasts, regional growth is among the lowest in the world at a time when the region faces major uncertainties, such as the possible emergence of new variants of the coronavirus, rising inflationary pressures, and the war in Europe threatening the global recovery, according to the agency’s report.

In fact, the regional growth forecast was revised downward by 0.4% following the Russian invasion of Ukraine.

On the positive side, immunization is now widespread in the region, businesses are hiring again and schools are reopening. However, the long-term consequences of the crisis remain and need to be addressed. The regional poverty rate rose to 27.5% by 2021, still above pre-pandemic levels (25.6%), while learning losses among millions of school-age youth could lead to a 10% drop in future income.

To avoid a return to the low growth rates of the 2010s, countries in the region will need to implement a series of long-delayed structural reforms and take advantage of the opportunities offered by an increasingly green global economy, the WB notes.

“We are in a global environment of great uncertainty, which could impact post-pandemic recovery. In the longer term, however, the challenges of climate change will be even more pressing, forcing us to urgently move toward a greener, more inclusive, and productivity-enhancing growth agenda,” said Carlos Felipe Jaramillo, World Bank vice president for Latin America and the Caribbean.