Ecuador Internacional

Ecuador’s President Promises to Tackle Impact of Oil Price Fall

The Wall Street Journal - MERCEDES ALVARO 24/02/2015

President Rafael Correa said Ecuador will implement measures to curb the economic impact of the drop in oil prices and the stronger U.S. dollar, two events that private-sector economists say will hurt growth this year.

“We are taking all measures needed to be prepared. A good economic policy is to make the country less vulnerable to these external factors,” Mr. Correa said during his weekly address broadcast on Saturday.

The price of Ecuadorean crude oil has fallen almost 56%, from $91 in January 2014 to about $40 a year later.

Lower oil prices are expected to drag down economic growth in a country whose oil sector generates about one-quarter of total government revenue and about a half of the country’s exports.

“Ecuador is leaving behind years of prosperity with strong oil prices, in which the state took a leading role in the economy,” said Alberto Acosta, an economist with private consulting firm Grupo Spurrier.

Although the government previously had forecast that the economy would grow 4% this year, that forecast was based on oil prices averaging about $80 per barrel.

Santiago Mosquera, an economist with the local investment bank Analytica Securities, said the economy will likely grow between 0.9% and 1% in 2015 and 2.8% in 2016.

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