Macroeconomic Forecast Ecuador

May 2008 | Macroeconomic Forecasts

With its currency the US dollar, Ecuador has no monetary policy options to help address inflationary pressures and cannot benefit from currency appreciation. Consumer price inflation (CPI) posted an increase of 8.2% y-o-y on April, the highest annual rate in almost five years, driven primarily by food price growth of 17.0% y-o-y as a result of global trends and recent flooding. Across multiple categories, prices have accelerated, indicating inflationary pressures are more extensive than simply food. Alcoholic beverages prices grew 18.6% y-o-y and furniture by 12.7% y-o-y for example. We expect inflation to end the year at 4.9%, but acknowledge significant upside risks.

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