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Household consumption reaches historical record, according to the ECB

Published on January 09, 2023

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According to the Central Bank, household consumption represents about 65% of Ecuador’s Gross Domestic Product (GDP).

The Gross Domestic Product (GDP) of Ecuador grew 3.2% in the third quarter of 2022, mainly due to an increase in household consumption.

Family spending amounted to $11.807 billion in real terms between July and September 2022, a historical record, says the manager of the Central Bank, Guillermo Avellán

It is an increase of 3.8% compared to the same period of 2021.

One of the factors that explains the increase in household consumption is the growth of consumer credit at 21.3% in 2022, although this indicator is not excessive, according to the Central Bank.

“It is important to clarify that we do not see excessive household indebtedness, which allows us to think that there will be a positive trend in this indicator in the coming months,” says Avellán.

In this context, the Central Bank expects the country’s economy to maintain its upward trend and grow 3.1% in 2023.

Employment in the United States

Another factor that encourages greater family spending is the recovery of adequate employment, although it has not yet reached levels prior to the Covid-19 pandemic, Avellán acknowledges.

The increase in the flow of remittances also influences spending, due to the increase in wages in countries where Ecuadorian immigrants live.

One of those countries is the United States, which created some 420,000 jobs per month in 2022. The sectors with the highest generation of jobs were leisure, hospitality and health.

This has meant opportunities for migrants from Latin America and Ecuador, explains Avellán.

Up and down

Higher household consumption and fewer restrictions due to the Covid-19 pandemic have allowed 14 of the 18 economic activities analyzed by the Central Bank to register growth in the third quarter of 2022.

Those that recovered the most were aquaculture and shrimping, accommodation and food services, and electricity and water supply.

“We are optimistic about the performance that aquaculture and shrimp fishing can have in 2023, above all, due to the opening of the Chinese market,” says Avellán.

That is due to the dismantling of the zero covid policy in China, thereby eliminating coronavirus tests on imported food products, effective January 8, 2023.

Avellán adds that the increase in trade agreements, the goal of the current government, can also boost exports from aquaculture and other sectors.

Conversely, the economic activities that contracted in the third quarter of 2022 were oil refining, fishing, agriculture, and domestic service.

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