The World Bank predicts that Ecuador will be the second fastest growing economy in South America by 2022

Ecuador will be the second fastest growing economy in South America this 2022, according to the World Bank. The multinational organization predicts Ecuadorian GDP growth at 4.3% above growth in the other countries of the region and just below Colombia.

This is a much more optimistic outlook than that calculated by the Central Bank of Ecuador, which announced last week that GDP growth will be 2.8%. Similarly, by 2023, the agency expects the Ecuadorian economy to grow by 3.1% and by 2024 by 2.9%.

Ecuador's growth is barely detached from the growth of its nearest neighbors, because while Colombia will continue to grow at 4.4%, Peru will grow to 3.4%. This latest estimate is a drastic change from 2021 because the Peruvian economy closed 2021 with growth of 13.3% and Colombia 10.6%.

Guillermo Avellán, general manager of the Central Bank, says that the new forecast of economic growth in Ecuador and the region will take into account the impact of the war on Ukraine, as well as rising oil prices and external shocks.

With a 6.9% rebound in 2021, the World Bank expects regional GDP to grow by 2.3% this year and an additional 2.2% in 2023, while most countries are experiencing a sharp change in GDP that occurred as a result of the global health crisis due to COVID-19.

These forecasts include subcontinental growth that is among the weakest in the world at a time when the region is experiencing uncertainties caused by the potential for mutability of the coronavirus and the war in Ukraine. Even regional growth forecasts were estimated to fall by 0.4 per cent after the Russian invasion of Ukraine.

However, as in Ecuador, immunization campaigns were successful in many parts of the region, which meant that commercial and educational activity had resumed. The consequences inherited by the pandemic for the reactivation of economies, however, persist. The regional poverty rate is expected to rise to 27.5 per cent and remain at a higher level than that experienced before the pandemic, at 25.6 per cent.

The World Bank says that, in order to avoid a recession such as that suffered during the 2010s, countries in the region will need to adopt a continually postponed regulatory framework and take advantage of the opportunities offered by the growing green economy.

Carlos Felipe Jaramillo, World Bank Vice President for Latin America and the Caribbean, says this is a global context of extreme uncertainty, which could affect the recovery of economies after the impact of the pandemic. He adds that, in the long term, the challenge of climate change will intensify, requiring a rapid transition to a “greener, more inclusive and productivity-boosting growth agenda,” Bloomberg said.

Latin America is beginning to overcome the impact of Covid-19 on economic performance, but some structural difficulties remain for recovery to reduce poverty in the region.

The World Bank believes that subcontinental growth will be mediocre, amid a situation in which countries face different long-term structural crises, which today also face the global impacts of the war between Russia and Ukraine.

The multinational organization expects Latin America and the Caribbean to grow by 2.3% this year and 2.2% next year, a figure that is not only lower than in January, but is also almost the same rate as in the 2010s. The two largest economies in Latin America, Brazil and Mexico, also experience significant declines, affecting overall performance. On the other hand, there are countries such as Argentina, Bolivia, Ecuador and Colombia whose indicators are now more optimistic.

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