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Ecuador: Economic Development & International Marketing, Supporting…
Ecuador: Economic Development & International Marketing
Ecuador's Political risk for 2021
Due to the pandemic of COVID 19 Ecuador has been hit hard by the virus itself and by the disruption caused by efforts to contain its spread.
In 2019 GDP has grown in 0,1% but
for 2020 is expected to contract by 8.7%
Ecuador had already entered into a recession in this year, the dual shock of a collapse in both oil incomes and tax revenue led to a public financing gap of $13.5 billion, provoking mounting payment delays for public sector salaries and state providers
Ecuador’s economic
prospects have improved,
demonstrated by
The dramatic reduction of
it’s sovereign risk premium
An upgrading of its
credit rating to B-.
The recovery in 2021
and heavily dependent on
two major factors:
The overall recovery pace of the world economy
The reforms that the new government taking office in May 2021 is able to implement.
Investors don’t overlook the governability problem any candidate elected in 2021 will face.
The 2021 election field will make it difficult for any candidate to consolidate an outright majority and for a new government to advance significant reforms, including those linked to an IMF program.
There will be a respite for the beleaguered government in 2020-21 because of deals with creditors and a new IMF arrangement.
After the February polls, there will be a new government in May 2021.
The new government is expected that remain comitted to IMF program objectives.
However, barriers to gobernability wil persist, raising implementation risks.
The expected GDP expenditure for the two next years is refelected as an expense growth in 2021 of:
Government consumption
Exports of goods and services
Private consumption
Imports of goods and services
While the only expense growth in the year 2022 is in:
Gross fixed investment
And finally, the origin of GDP is made of agriculture, industry and services considering that the first two will generate higher GDP in 2022 and the last in 2021.
The country's World Bank Overview
Efforts to be done
Ensure fiscal sustainability
Fiscal consolidation and private sector development are primordial for achieving economic stability and reverse over government's excesive control.
Strengthen the foundations of dollarization
Foreign investment is needed in order to activate economic growth.
Promote new engines of growth
The 2014 Ecuador's oil prices declining revealed the country’s lack of macroeconomic cushions and limited private investment.
Ensure social welfare
Safeguarding social protection mechanisms is indispensable for the most vulnerable sectors. Due to COVID-19 health care performance should cover most of the citizens.
Strategy
Economic Growth
Boosting human capital development
Protecting vulnerable populations
Enhancing institutional and environmental sustainability.
Development
Transparency of production sectors
Spending efficiency
Human Capital
Supporting fundamentals for inclusive growth