No, Ecuador Is Not Heading into Its Second Year of Recession

July 24, 2017

In an article about Ecuador’s presidential transition that appeared in Bloomberg View, Mac Margolis claims that “Moreno takes over as Ecuador heads into its second year of recession.” However, this is not true.

Looking at quarterly GDP data for Ecuador, we see a different picture.

merling ecuador gdp 2017 07

The figure above shows seasonally adjusted real quarterly GDP, and real quarterly GDP growth. As can be seen, in the past two years Ecuador has had three quarters of positive growth. In the second and third quarters of 2016, GDP grew by 0.5 percent per quarter, or 2 percent at an annualized growth rate. The last quarter of 2016 posted quarterly growth of 1.8 percent, or over 7 percent at an annualized rate. In the first quarter of 2017, growth was slightly negative, with a quarterly GDP drop of 0.15 percent (0.6 percent at an annualized rate).

Looking at the year-over-year growth from the first quarter of 2016 to the first quarter of 2017, we find a positive growth rate of 2.6 percent.

Bloomberg’s reporting on Greece, for example, uses the standard procedures and definitions of the economics profession, including quarterly (seasonally adjusted) data and an accepted definition of recession. The standards of reporting for Ecuador should not be any different.

While it is unfortunate that the positive growth posted by Ecuadorian GDP in the last three quarters of 2016 did not extend to the first quarter of 2017, presenting Ecuador’s economy as being in a two-year recession is simply wrong.

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