QUITO, Oct 23 (Reuters) - Ecuador’s economy is expected to expand 1.1 percent in 2018, the country’s central bank chief said on Tuesday, down from its prior forecast for 2 percent growth, due to a reduction in public spending as the government tries to balance its fiscal accounts.
The bank’s director, Veronica Artola, told reporters the bank did not yet have a forecast for 2019, but that she did not expect a return to strong growth until 2020.
“These are years of adjustment because we are trying to have more solid public finances and reduce the fiscal deficit, and that will have an impact on the economy,” Artola said.
The South American country is adopting austerity measures under President Lenin Moreno to try to reduce its primary and overall fiscal deficit, which includes debt servicing. They are expected to close the year at 1.2 percent and 4.1 percent of gross domestic product (GDP), respectively.
The economy grew a modest 0.9 percent year-over-year in the second quarter of 2018, central bank figures show, due to a sharp decline in the OPEC nation’s oil sector. (Reporting by José Llangarí and Alexandra Valencia Writing by Luc Cohen, Editing by Rosalba O’Brien)