Ecuador economy grows 9 percent in third quarter

December 31, 2011

RECORDER REPORT

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Ecuador's economy expanded 9 percent in the third quarter from a year ago, driven by the construction and oil sectors, but slowed from the previous quarter, the central bank said on Friday. The Opec-member country is forecast to grow 6.5 percent this year, almost three percentage points more than in 2010, chiefly due to increased state spending on roads, hospitals and schools.

The economy expanded 1.7 percent in the third quarter versus the previous quarter, slowing from the previous quarter-on quarter growth of 2.3 percent. The bank revised annual growth rates for the second quarter to 9.3 percent from 8.9 percent, and for the first quarter to 8.9 percent from 8.62 percent.

Ecuador's government has vowed to continue spending heavily to spur growth next year, ahead of a presidential election in January 2013. The country is forecast to expand 5.35 percent in 2012. In the third quarter, the oil sector grew 5.12 percent year on year, while the non-oil sector expanded 11.2 percent, a senior central bank official told reporters. Biggest quarterly growth came from construction, which expanded 31.8 percent, refined oil products 28.7 percent, and water and electricity supply 18.4 percent.

High oil prices have allowed leftist President Rafael Correa to boost social spending, which has spurred growth and improved any re-election chances, even though he has not said if he would run. Correa is part of a South American leftist alliance that includes presidents Hugo Chavez of Venezuela and Evo Morales of Bolivia. They have changed laws to boost their power and increase state revenue from foreign investors. Highly dependent on oil exports for growth and aware that prices could falter, the government is negotiating deals with foreign miners to develop a large mining industry.