December 13, 2012 / 12:25 AM / 5 years ago

UPDATE 2-Ecuador economy to grow around 5 pct in 2012-president

* Correa sees 2012 inflation rate under 5 percent

* Says economic growth has cut poverty rate

* Country has secured financing for 2013 budget

By Alexandra Valencia

QUITO, Dec 12 (Reuters) - Ecuador’s economy is likely to grow around 5 percent in 2012, while the inflation rate for the full year will be less than 5 percent, President Rafael Correa said on Wednesday.

High oil revenues have allowed Correa to boost state spending on infrastructure and welfare, which has fueled economic growth in the past few years. The economy expanded 8 percent in 2011 and 3.3 percent in 2010.

“We hope to end the year with growth of around 5 percent. Inflation will be within forecasts, under 5 percent,” Correa said during a press conference at the presidential palace.

“Our (economic) growth is healthy. Poverty rates and inequality have decreased.”

The U.S.-trained economist said growth next year would be affected by the global economic slowdown and the stoppage of the country’s largest refinery, Esmeraldas, which is scheduled to go offline for several months for an overhaul.

Ecuador will have to increase fuel imports, which will have a negative impact on the economy. Correa said he sees economic growth in 2013 at more than 3.5 percent.

According to polls, Correa is the clear favorite to win an election in February 2013. The good state of the economy is likely to help his re-election bid.

“The polls are so good that we’ve asked pollsters to do them again because we can’t believe how good they are,” Correa said.

The latest survey by local pollster Cedatos estimates that Correa will win 52 percent of the vote, 31 percentage points more than his closest rival, former banker Guillermo Lasso.


Finance minister Patricio Rivera said the Andean country has secured financing for its 2013 budget, which will total around $6 billion. He said that part of the funding will come from China, which will lend $2 billion to Ecuador.

China became Ecuador’s top lender after the country defaulted on $3.2 billion in global bonds in 2008.

“Originally the loan was worth $1.7 billion, but it went up slightly during the negotiations and will be of $2 billion,” Rivera said at the same press conference.

Ecuador is in talks with Beijing for financing for the $12.5 billion Pacifico refinery project. China National Petroleum Corp (CNPC) is also interested in investing in the project.

Ecuador’s credit rating outlook has been raised by Moody‘s, Fitch and Standard & Poor’s this year. The rating agencies kept the default-prone country in junk bond territory, but noted its improved ability to find financing and good economic growth.

Ecuador is OPEC’s smallest member and has benefited from high crude prices this year.

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