World Bank Forecasts Ecuador GDP Growth at 2% for 2026, Among Slowest in Latin America

World Bank Forecasts Ecuador GDP Growth at 2% for 2026, Among Slowest in Latin America

The World Bank projects Ecuador's economy will expand by approximately 2.0% in 2026, according to its latest Global Economic Prospects report -- a rate that places the dollarized Andean nation among the slower-growing economies in Latin America and below the regional average of 2.4%.

Multilateral Consensus

The World Bank's forecast aligns closely with projections from other major institutions, forming a narrow consensus band:

Institution	2026 GDP Growth Forecast
World Bank	~2.0%
IMF	2.0%
CEPAL	2.1%
BCE (Central Bank)	1.8%
MEF (Finance Ministry)	2.3%

The tight clustering of forecasts around 1.8-2.1% reflects a shared assessment that Ecuador's economy faces a balancing act between fiscal consolidation requirements under the IMF programme and the need to sustain domestic demand and investment.

"Ecuador's growth outlook is constrained by the fiscal adjustment path, but supported by commodity export revenues and an improving business environment," the World Bank noted in its assessment. "The country's dollarization framework provides price stability but limits countercyclical monetary policy options."

Growth Drivers and Headwinds

Positive factors:

• Mining sector expansion: Exports from the Fruta del Norte gold mine and early-stage copper projects are projected to exceed $3.9 billion, up from $3.2 billion in 2025
• Trade surplus: The Ministry of Economy and Finance projects a merchandise trade surplus of approximately $7.647 billion (+2.9% YoY), supported by strong non-oil export performance
• Minimum wage increase: The 2.6% increase to $482/month effective January 1 provides a modest boost to consumption
• Construction activity: Public and private sector building permits have increased 18% in the pipeline for 2026

Constraining factors:

• Fiscal consolidation: The IMF programme requires continued primary surplus maintenance, limiting government spending flexibility
• Oil production decline: State oil output has been trending downward, reducing a key source of fiscal and export revenue
• Security costs: Ongoing military and police operations against organized crime consume approximately 2.4% of GDP in security-related spending
• Global uncertainty: Potential US tariff actions and China demand softness pose external risks to Ecuador's commodity-dependent export basket

Inflation and Monetary Conditions

Ecuador's dollarization regime continues to deliver among the lowest inflation rates in Latin America. The BCE forecasts consumer price inflation of 2.8-3.2% for full-year 2026, compared to:

• Colombia: 4.8% (forecast)
• Peru: 2.5%
• Chile: 3.4%
• Argentina: 35% (forecast)
• Regional average: 6.1%

The stable price environment supports real wage growth and consumer purchasing power, though it also means Ecuador cannot use exchange rate depreciation to boost export competitiveness.

Fiscal Outlook

The MEF's 2026 fiscal framework targets:

• Total government revenue: $24.8 billion
• Primary fiscal balance: Surplus of 0.8% of GDP
• Public debt-to-GDP ratio: Declining to approximately 54% from 56.2% in 2025
• Non-oil tax revenue: Expected to grow 6.2% following implementation of the tax reform package currently before the National Assembly

Regional Comparison

Among South American economies, Ecuador's projected growth rate trails the regional leaders:

Country	2026 GDP Growth (WB)
Paraguay	3.8%
Bolivia	3.2%
Colombia	2.8%
Peru	2.6%
Chile	2.4%
Ecuador	2.0%
Brazil	1.9%
Argentina	1.5%

However, economists note that Ecuador's growth quality has improved, with a higher share of expansion driven by private investment and non-oil exports rather than public spending -- a structural shift that may support more sustainable medium-term growth.