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Sunday, December 23, 2007

Ecuador GDP to Expand Least Since 1999, Ortiz Says

By Stephan Kueffner

Dec. 11 (Bloomberg) -- Ecuador's economy will probably post its smallest growth in eight years in 2007 after disruptions in oil production caused output to tumble, Economy Minister Fausto Ortiz said.

Gross domestic product may grow less than 2.5 percent, Ortiz said at a news conference today in Quito. That would be the slowest expansion since Ecuador's $40.9 billion economy contracted 6.3 percent in 1999 as the country's currency collapsed, leading the government to adopt the U.S. dollar.

``The improvements we've been making in recovering oil output haven't allowed us to outweigh the drop in production,'' said Ortiz. ``That's dragging down gross domestic product growth.''

Growth won't meet the central bank's most recent estimate from August, when it said growth would slow 3.4 percent this year, down from 4.1 percent in 2006, as a result of political and management disruptions in the oil industry. From January through October, oil output fell six percent to 154.33 million barrels from 164.33 million barrels in the same period last year.

With private and public-sector oil output recovering, GDP growth next year will probably top the 4.2 percent rate estimated in the 2008 budget, he added.

``The fear we had regarding private sector production has faded,'' Ortiz said.

Amazon Fields

The previous administration stripped U.S. oil company Occidental Petroleum of its concession, where that company produced some 100,000 barrels a day.

State oil company PetroEcuador, which inherited the fields, initially lacked the resources to manage them and only this month pushed daily output back to the levels reached by Occidental, Ortiz said.

Unrest in Ecuador's part of the Amazon basin, where it produces most of its oil, has also undermined output, and President Rafeal Correa on Nov. 29 decreed an emergency over much of that area as well as over PetroEcuador in a bid to avoid further attacks on the company.

Correa's 11-month old administration has now resolved most of the issues affecting the oil industry, though it had some start-up problems to solve, said Ortiz.

Ecuador, the smallest member of the Organization of Petroleum Exporting Countries, averaged oil output of 509,000 barrels of oil a day from January through October.

By the end of 2008, the government aims to push oil output to some 520,000 barrels a day.

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