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The Ecuadoran Economy
The growth rates of the last 10 years in Ecuador
have been very positive and when compared with
other neighbouring countries it is the second fast-
est growing economy after Peru. However, arguably
with better social outcomes.
After the global credit crunch of 2009, many emerg-
ing economies were gravely affected. However, Ec-
uador managed to maintain a remarkable degree of
macrostability providing major success in terms of
return on stocks, imports and in achieving positive
economic growth.
When analyzing the Ecuadorian economy it is im-
portant to differentiate between Oil GDP Growth
and Non. Oil GDP represents 12-14% of the
economy and is central to Ecuador’s dollarized
economy. Under the current government, oil rev-
enues have increased. Similarly, Non-Oil GDP
has also grown in recent years at an estimated
3.8% per year . However, with the recent rises in
oil revenues, this figure is expected to be around
5%.
In 2010, the economy has seen a slow but steady
recovery. Positively, high public investment has
been made in infrastructure changing the energy
and production situation which is ultimately pulling
the economy in the right direction.
Private investment recovery is expected to grow to
5% in coming years due to general economic recov-
ery and increased oil production. Oil production has
otherwise been falling during the last 3 years due to
renegotiations of oil contracts. As the rules were not
clear, private oil investment had fallen as public in-
vestment had risen.
With regards to Non-Oil GDP, with the new Produc-
tion Code it will inevitably boost private investment,
foreign direct investment (FDI) and mirror image
economic hotspots like China, but with better con-
ditions. The increasing importance of mining to the
economy in 2012 will also shine through as it did in
the 1970’s.
Another important factor is the considerable shift in
trends within the energy market. Ecuador has im-
ported diesel powered thermal energy and is also
consciously encouraging hydropower. This has had
a significant fiscal impact because the diesel is sub-
sidized. When the power plant of Coca-Codo-Sin-
clair is up and running, the state will save 700 million
USD per year from a fiscal and external standpoint in
an economy of about 50,000 M USD, helping to have
more liquidity in the economy, i.e., more dollars will
circulate and therefore will be able to finance more
economic activities.
On the other hand, the Pacific Refinery that is in
construction will prevent the importation of fuel and
therefore will be dollar inflows in the economy be-
cause it imports about USD 3,000 M of fuel annually.
MACROECONOMIC
INDEX AND FORECASTS
Ecuador’s economy grew by 3.7% in 2010 and is
forecast to grow by 5.06% in 2011. In 2012, it is
predicted that the economy will grow by 5.17%. For
2010, the Government forecasts predict an inflation
rate of 4% and 3.69% in 2011 whilst it was below
5.1% in 2009.