Economic growth picks up in Q4 2025

GDP growth overshoots market expectations: Ecuador's GDP grew 5.0% on a seasonally adjusted year-on-year basis in Q4, following 3.0% growth in the previous quarter, coming in above market expectations. Q4's reading was the strongest since Q2 2023. As a result, in 2025 as a whole, the economy expanded by 3.7% (2024: -1.9%), well above the past 10-year average and rebounding from the 2024 contraction, which had been partly caused by nationwide power outages. On a seasonally adjusted quarter-on-quarter basis, economic output increased 3.0% in Q4, following a 0.7% contraction in the previous quarter.

Fixed investment and exports underpin the acceleration: Compared with the prior quarter's data, figures in Q4 improved for fixed investment (+5.5% in annual terms vs +2.5% in Q3), exports of goods and services (+13.8% vs -2.7% in Q3) and imports of goods and services (+3.9% vs +2.0% in Q3). In contrast, readings worsened for private consumption (+1.1% vs +5.7% in Q3) and government consumption (-0.9% vs -0.5% in Q3). The external sector was the main contributor to growth and was likely bolstered by the reopening of oil pipelines, which had been shut in July; crude petroleum accounts for about 35% of total goods exports. Moreover, IMF funds inflow likely aided fixed investment growth.

GDP growth to ease, but U.S.-Iran war offers some tailwinds: Our panelists expect economic growth to drop from Q4 levels during H1 2026 on the back of notably higher inflation due to the removal of energy subsidies and trade tensions with neighboring Colombia. Looking at 2026 as a whole, economic growth should fall from 2025’s three-year high. That said, our panelists have revised their 2026 GDP growth forecast upward following the start of the U.S.-Iran conflict, as higher oil prices are expected to push up government revenues and spending. Still, the evolution of the conflict in the Middle East is key to monitor: Even if Ecuador is a net oil exporter, its lack of refining capacity could result in higher inflation, hurting private consumption if oil prices remain elevated for longer.

Panelist insight: Commenting on the outlook, Sergio Armella, analyst at Goldman Sachs, stated: “We now forecast 2.5% growth in 2026 due, in part, to a better-than-expected performance of the economy at the end of 2025. Stronger terms of trade from higher oil prices could be an upside but an environment of heightened global economic uncertainty and tighter financial conditions could weaken the external impulse.”

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