MarketEconomy of Ecuador
Company Profile

Economy of Ecuador

The economy of Ecuador is the eighth largest in Latin America and the 69th largest in the world by total GDP. Ecuador's economy is based on the export of oil, bananas, shrimp, gold, other primary agricultural products and money transfers from Ecuadorian emigrants employed abroad. In 2017, remittances constituted 2.7% of Ecuador's GDP. The total trade amounted to 42% of Ecuador's GDP in 2017.

Industries
Oil Oil accounts for 40% of exports and contributes to maintaining a positive trade balance. Since the late '60s, the exploitation of oil increased production and reserves are estimated at 4.036 million barrels. Ecuador's oil industry is a cornerstone of its economy, contributing significantly to export earnings and government revenues. As of 2023, the country holds approximately 8.3 billion barrels of proven crude oil reserves . In 2022, crude oil accounted for about 27% of Ecuador's total export value, with major export destinations including Latin America, North America, and Asia. The state-owned company Petroecuador plays a pivotal role in the oil sector, often operating in partnership with private and foreign corporations . Recent initiatives aim to boost oil production through foreign investments, with plans to attract approximately $42 billion in the oil sector by 2029 . However, oil extraction has raised environmental and social concerns, particularly in the Amazon region. In 2023, a national referendum led to the cessation of oil drilling in Block 43 within Yasuni National Park, a biodiverse area home to Indigenous communities. Agriculture In the agricultural sector, Ecuador is a major exporter of bananas, being the largest exporter in the world; cut flowers; cocoa bean, where it is among the top 10 producers in the world; coffee; shrimp; lumber; fish; and palm oil, where it is among the top 10 producers in the world. In 2018, the country produced 7.5 million tons of sugarcane, 6.5 million tons of banana (6th largest producer in the world), 2.7 million tons of palm oil (6th largest producer in the world), 1.3 million tons of maize, 1.3 million tons of rice, 269 thousand tons of potato, 235 thousand tons of cocoa (7th largest producer in the world), 149 thousand tons of pineapple, 103 thousand tons of orange, in addition to smaller productions of other agricultural products. In more recent years, banana production has increased to around 7 million tons annually (7.16 million tons produced in 2023). Ecuador's tobacco is prized in the cigar industry due to the prolonged cloud cover and rich volcanic soil creating ideal growing conditions, especially for shade tobacco and Ecuadorian Sumatra Tobacco cigar wrapper leaves; exports topped $70M in 2018. The dairy industry is represented by companies such as Tonicorp, which is owned by the Coca Cola Company. Heavy industry Industrial production is concentrated mainly in Guayaquil, the largest industrial center, and in Quito, where in recent years industry has grown considerably and which is also the largest business center of the country. Minor industrial activity is also concentrated in Cuenca. Mining In 2019, the country had an annual production of about 1 ton of antimony, which made it the 14th largest producer in the world. In 2006, Ecuador had an annual production of about 5.3 tonnes of gold, being the 34th largest producer in the world at the time. Ecuador produced 8.6 tons of gold in 2013, which was the absolute record between 2006 and 2017. In 2017, production was 7.3 tons. In terms of silver production, Ecuador produced 1 ton in 2017, which is the country's usual average. In 2019, in the north of Ecuador, a large deposit of gold, silver and copper was discovered. == Electricity ==
Electricity
As of December 2022, the generation and transmission infrastructure of Ecuador included: • total installed generation capacity of 8,864 megawatts (MW) that included • 5,425 MW of renewable energy generation with • about 5200 MW of hydropower (in Ecuador, considered as renewable); • National Interconnection System (SNI) that was able to use 7,472 MW of the total capacity above (including 4375 MW from renewable sources). The remaining 1,390 MW are not part of the countrywide grid; • National Transmission System (SNT) with line voltages 500 kilovolt (kV), 230 kV and 138 kV, 4,382 km of single-circuit lines and 2,462 km of double-circuit lines, including • interconnection with Colombia (two 230 kV Jamondino-Pomasqui double-circuit lines and a 138 kV Tulcán-Panamericana single-circuit line); • interconnection with Peru (a 230 kV Machala-Zorritos double-circuit line). Distribution is provided through distribution companies with total billing of 2 billion US dollars and electricity losses of 13.25%. As of December 2022, they managed: • 370 substations with total capacity of 8,545 megavolt-amperes (MVA) • 67 sectioning substations; • 5,730 km of subtransmission lines; • 111,276 km of medium voltage lines; • 105,469 km of low voltage lines • 360,000 distribution transformers with a total capacity of 14,100 MVA; • 5.56 million electrical meters (coverage of 97.4%). The peak demand on the SNI grid occurs in April (4,388 MW in 2022). The total generation in 2022 was 33 terawatt-hours (TWh) with 87% delivered by SNI and the rest by provider unincorporated into the grid. The breakdown by the power source at the SNI was as follows: • hydroelectric 24.6 TWh (85.3%); • fossil fuel 3.8 TWh (13%); • biomass 0.35 TWh (1.2%); • solar photovoltaic, biogas, wind energy less than 1% combined. The amount of reported unavailable generation capacity varied between 1,170 and 1,610 GW in 2019-2022, approximately evenly split between hydro and thermal power stations. The plan of r2023-2032 called for major expansion of the generation capacity, primarily renewable energy (additional 6,300 MW), but with 700 MW of "firm" (thermal) capacity scheduled to come on-line in 2024-2025. This "firm" generation was intended for the electric grid security and "quality of supply". During the 2023-2024 Ecuador electricity crisis, in the fall of 2024, the amount of thermal generation was significantly lower than the numbers above would suggest. For example, according to Miguel Calahorrano, an ex-minister of electricity and renewable energy, only Trinitaria (125 MW), Machala Gas (125 MW), G. Zevallos (146 MW) and Jaramijó (140 MW) were operating at high power until October 15, 2024. ==Sciences and research==
Sciences and research
's first satellite, NEE-01 Pegasus Ecuador was placed in 96th position of innovation in technology in a 2013 World Economic Forum study. Ecuador was ranked 91st in the Global Innovation Index in 2021 up from 99th in 2020. The most notable icons in Ecuadorian sciences are the mathematician and cartographer Pedro Vicente Maldonado, born in Riobamba in 1707, and the printer, independence pioneer, and medical pioneer Eugenio Espejo, born in 1747 in Quito. Among other notable Ecuadorian scientists and engineers are Lieutenant Jose Rodriguez Labandera, who built the first submarine in Latin America in 1837; Reinaldo Espinosa Aguilar (1898–1950), a botanist and biologist of Andean flora; and José Aurelio Dueñas (1880–1961), a chemist and inventor of a method of textile serigraphy, reputed to have many wives. The major areas of scientific research in Ecuador have been in the medical fields, tropical and infectious diseases treatments, agricultural engineering, pharmaceutical research, and bioengineering. Being a small country and a consumer of foreign technology, Ecuador has favored research supported by entrepreneurship in information technology. The antivirus program Checkprogram, banking protection system MdLock, and Core Banking Software Cobis are products of Ecuadorian development. The scientific production in hard sciences has been limited due to lack of funding but focused around physics, statistics, and partial differential equations in mathematics. In the case of engineering fields, the majority of scientific production comes from the top three polytechnic institutions: Escuela Superior Politécnica del Litoral – ESPOL, Universidad de Las Fuerzas Armadas – ESPE, and Escuela Politécnica Nacional EPN. The Center for Research and Technology Development in Ecuador is an autonomous center for research and technology development funded by Senecyt. However, according to Nature, the multidisciplinary scientific journal, the top 10 institutions that carry the most outstanding scientific contributions are: Yachay Tech University (Yachay Tech), Escuela Politécnica Nacional (EPN), and Universidad San Francisco de Quito (USFQ). ==Trade==
Trade
The overall trade balance for August 2012 was a surplus of almost 390 million dollars for the first six months of 2012, a huge figure compared with that of 2007, which reached only $5.7 million; the surplus had risen by about 425 million compared to 2006. This circumstance was due to the fact that imports grew faster than exports. The oil trade balance positive had revenues of $3.295 million in 2008, while non-oil was negative amounting to 2.842 million dollars.. The trade balance was positive in 2019 and 2020 with 2.05 billion dollars and 6.4 billion dollars. In 2016, the trade balance was positive (608 million dollars) but negative in 2017 (-723 million dollars) and 2018 (1.41 billion dollars). The trade balance with Argentina, Colombia and Asia is negative. Ecuador has negotiated bilateral treaties with other countries, besides belonging to the Andean Community of Nations, and an associate member of Mercosur. It also belongs to the World Trade Organization (WTO), in addition to the Inter-American Development Bank (IDB), World Bank, International Monetary Fund (IMF), Development Bank of Latin America and the Caribbean (CAF) and other multilateral agencies. In April 2007, Ecuador paid off its debt to the IMF thus ending an era of interventionism of the Agency in the country. The public finance of Ecuador consists of the Central Bank of Ecuador (BCE), the National Development Bank (BNF), the State Bank, the National Finance Corporation, the Ecuadorian Housing Bank (BEV) and the Ecuadorian Educational Loans and Grants. == Economic history ==
Economic history
Deteriorating economic performance in 1997–98 culminated in a severe financial crisis in 1999. The crisis was precipitated by a number of external shocks, including the El Niño weather phenomenon in 1997, a sharp drop in global oil prices in 1997–98, and international emerging market instability in 1997–98. These factors highlighted the Government of Ecuador's unsustainable economic policy mix of large fiscal deficits and expansionary money policy and resulted in a 7.3% contraction of GDP, annual year-on-year inflation of 52.2%, and a 65% devaluation of the national currency in 1999. On January 9, 2000, the administration of President Jamil Mahuad announced its intention to adopt the U.S. dollar as the official currency of Ecuador to address the ongoing economic crisis. Subsequent protest led to the 2000 Ecuadorean coup d'état which saw Mahuad's removal from office and the elevation of Vice President Gustavo Noboa to the presidency. US Dollar has been the only official currency of Ecuador since the year 2000. The Noboa government confirmed its commitment to convert to the dollar as the centerpiece of its economic recovery strategy, successfully completing the transition from sucres to dollars in 2001. Following the completion of a one-year stand-by program with the International Monetary Fund (IMF) in December 2001, Ecuador successfully negotiated a new $205 million stand-by agreement with the IMF in March 2003. Buoyed by higher oil prices, the Ecuadorian economy experienced a modest recovery in 2000–01, with GDP rising 2.3% in 2000 and 5.4% in 2001. GDP growth leveled off to 2.7% in 2002. Inflation fell from an annual rate of 96.1% in 2000 to an annual rate of 37.7% in 2001; 12.6% for 2002. The completion of the second Transandean Oil Pipeline (OCP in Spanish) in 2003 enabled Ecuador to expand oil exports. The OCP will double Ecuador's oil transport capacity. Ecuador's economy is the eighth largest in Latin America and experienced an average growth of 4.6% per year between 2000 and 2006. In January 2009, the Central Bank of Ecuador (BCE) put the 2010 growth forecast at 6.88%. GDP doubled between 1999 and 2007, reaching 65,490 million dollars according to BCE. Inflation rate up to January 2008 was located about 1.14%, the highest recorded in the last year, according to Government. The monthly unemployment rate remained at about 6 and 8 percent from December 2007 until September 2008, however, it went up to about 9 percent in October and dropped again in November 2008 to 8 percent. Between 2006 and 2009, the government increased spending on social welfare and education from 2.6% to 5.2% of its GDP. Starting in 2007, when its economy was surpassed by the economic crisis, Ecuador was subject to a number of economic policy reforms by the government that have helped steer the Ecuadorian economy to a sustained, substantial, and focused achievement of financial stability and consistent social policy. On December 12, 2008, President Rafael Correa announced that Ecuador would not pay $30.6m in interest to lenders of a $510m loan, claiming that they were monsters. In addition it claimed that $3.8bn in foreign debt negotiated by previous administrations was illegitimate because it was authorized without executive decree. Showing signs of recovery in 2010, the economy rebounded and grew by 2.8%. After growth of 7.4% in 2011, Ecuador's growth averaged 4.5% from 2012 to 2014. == Poverty and inequality ==
Poverty and inequality
, an estimated 9 million Ecuadorians were economically active while about 1.01 million were unemployed. Unfortunately, income distribution throughout Ecuador has historically been highly unequal. In 1998, 10% of the richest population had 42.5% of income, while 10% of the poor had only 0.6% of income. The rates of poverty were higher for populations of indigenous, afro-descendent, and rural sectors. During the same year, 7.6% of health spending went to the 20% of the poor, while 20% of the rich population received 38.1% of this expenditure. The extreme poverty rate has declined significantly between 1999 and 2010. In 2001 it was estimated at 40% of the population, but by 2011 the figure dropped to 17.4% of the total population. This is explained largely by emigration and economic stability achieved after adopting the U.S. dollar as official means of transaction in 2000 . Despite these gains, poverty and inequality remain unevenly distributed across geographic, ethnic, and demographic groups. Poverty rates were and still are higher for indigenous peoples, Afro-descendants and rural areas, reaching 44% of the Native ancestry population. In 2023, national income poverty stood at 27% but rural areas experienced much higher rates reported around 46% while urban poverty reached only 18%. In 2022-2023, Indigenous communities experienced income or multidimensional poverty rates of up to 67%, while rates for Afro-Ecuadorians exceeded 45% Ecuador's contemporary patterns of poverty & inequality are deeply rooted in historical and structural factors. During the colonial period, land ownership was forcibly transformed from communal land tenure systems to highly concentrated hacienda systems. The haciendas relied on Indigenous labor to extract agricultural surplus for imperial markets. ==Infrastructure development==
Infrastructure development
The industrial sector has had enormous difficulty to emerge significantly. The industrial sector's main problem is the deficit of energy, which the current government has tackled with the improvement of performance on existing hydro plants, and the creation of new ones. Such projects included negotiation of the Coca-Codo hydroplant. Incentives of financing, tributary incentives, tariffs, and others will be implemented, that is intended to benefit areas of tourism, food processing, renewable and alternative energy sources, bioenergies, pharmaceutical and chemical products, biochemical and environmental biomedicine, services, automotive metallurgical industry, footwear, and automotive parts and pieces, among others. ==Statistics==
Statistics
Main economic indicators The following table shows the main economic indicators in 1980–2019 (with IMF staff stimtates in 2020–2025). Inflation below 5% is in green. == See also ==
tickerdossier.comtickerdossier.substack.com