Ecuador’s Central Bank president, Carlos Vallejo announced that the country’s economy will grow by 3.82 percent in 2009.

QUITO, Ecuador – Ecuador’s economy will grow by 3.82 percent in 2009, according to Central Bank President Carlos Vallejo, who also forecast 5 percent inflation for the year. Vallejo told the local press on 9 February that his estimate was based on oil prices of approximately US$37 a barrel.

According to ecuadorinmediato.com, Vallejo maintained that several scenarios had been used to make the forecast. He also said that in one scenario only 1.4 percent growth was projected, although he explained that “no way is it going to happen”.

Vallejo said that he expected 3.82 percent growth in view of the “uncertain” scenario in the international market.

Vallejo also pointed out that 3.62 percent growth had been forecast for 2008, according to ecuadorinmediato.com, but thanks to the economy’s good performance in the second quarter growth was later revised upwards to 5.3 percent.

In view of the performance of the agriculture and infrastructure sectors, he would not rule out 6.2 percent growth for 2008 when the figures are announced next month.

He also said that he expected inflation to drop to around five percent in 2009 from last year’s 8.83 percent.

This is not an official inflation estimate, however, because the Central Bank is not in charge of measuring the cost of living. According to Reuters, Vallejo said “inflation will be lower than last year for several reasons …This leads us to forecast inflation of no more than five percent”.

He also called for imports to be reduced, pointing out that they had risen by 35 percent in January compared with the same month last year. Ecuador’s presidential website reported Vallejo’s call “to lower the consumption of luxury goods and goods that are unnecessary for the country’s development”.

“Exports have plummeted, not because of the government’s fault, but because of a society with a hunger to consume, which is a very serious problem for Ecuador,” he added.

According to the Guayaquil newspaper El Telégrafo, Ecuador’s balance of trade (without oil) showed a deficit of more than $7 billion in 2008. Vallejo expects the deficit to drop by $1.5 billion to $2 billion over the coming months once Quito’s measures to restrict imports start to bite.