Coface Group


Population 16 million
GDP per capita 6,273 US$
Country risk assessment
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major macro economic indicators

  2013  2014 2015 (f)  2016 (f)
GDP growth (%) 4.6 3.8 -0.7 -1.0 
Inflation (yearly average) (%) 2.7 3.5 4.0 2.9
Budget balance (% GDP) -4.6 -5.3 -5.1 -3.6
Current account balance (% GDP) -1.0 -0.5 -2.5 -2.8
Public debt (% GDP) 25.9 31.3 37.3 40.4


(e) Estimate  (f) Forecast


  • Significant mineral, oil and gas potential
  • Almost energy self-sufficient thanks to hydroelectricity
  • Tourism potential (flora, fauna, cultural heritage)
  • Climatic diversity, enabling numerous types of crop
  • Marine wealth: world's biggest exporter of prawns


  • Poorly diversified economy, dependent on oil
  • Inadequate infrastructures (roads, dams) and poorly qualified work force
  • History of sovereign default
  • Weak private, domestic and foreign investment
  • State interventionism
  • Credit expensive and still underdeveloped
  • Opposition of indigenous populations and ecologists to the development of primary resources

Risk assessment

The contraction in economic activity set to continue in 2016

The Ecuadorian economy, largely dependent on public spending from oil revenues, felt the negative impact of falling oil and gas prices and moved into recession in 2015. After Venezuela, Ecuador was the country in Latin America that was next most severely impacted by the fall in crude oil prices. In 2016, activity is expected to suffer again with the continuing low oil prices and the loss of competitiveness of its non-oil exports as a result of the strengthening on the US dollar. Both agriculture and aquaculture production could suffer as the “El Niño” climatic phenomenon evolves. The government’s lack of resources are also likely to lead to a reduction in public investment whilst private investment will also suffer from the decline in the availability of credit as the banks are required as a priority to provide finance for the public sector. Household consumption is likely to remain weak, under the effect of rising unemployment, a wage freeze and import restrictions. The contraction in domestic demand should however lead to a reduction in inflationary pressures in 2016.


Low oil prices likely to lead to further budget cuts

In 2015, the fall in the price of oil, responsible for over one-third of budget receipts, forced the government to instigate measures to limit the rise in the public deficit: Consisting in the main of a freeze on public sector wages, higher taxes and duties on imports. In 2016 the government’s room for manoeuvre is likely to be yet again limited by low oil and gas prices. The 2016 budget has been approved on the basis of an average per barrel oil price of USD 35 (compared with USD 79.7 at the beginning of 2015) which means further adjustment measures. The government is thus planning to cut capital expenditure, civil service pay, as well as subsidies on fuel. There could also be sales of State owned assets, most notably the petrol distribution company that is part of Petroecuador, during the year. Despite the scale of the budget adjustment measures, the financing needs remain high (estimated at almost USD 4.4 billion). The country intends to cover these requirements through additional loans from China (its leading creditor), as well as from multilateral institutions (World Bank, IDB). The country could also make use of the international markets, but only at a higher cost, given the tightening of monetary policy in the United States. The external public debt is therefore set to increase and reach 40% of GDP in 2016, taking it to the legal limit defined in the Constitution. Most of this is held by China, with loans guaranteed by the granting of mining concessions, oil revenues and future electricity production.


Current account continues to suffer from falling oil and gas exports

The current account deficit is going to continue growing in 2016, as a result of the worsening balance of trade due to lower oil and gas product prices and the appreciation of the dollar. The trade in oil and its by-products represents almost 50% of the country’s exports and 20% of its imports. Although increased oil and gas production in 2016 is good for the balance of trade, the continuing weakness of oil prices will limit the benefits over the year. Non-oil exports (shrimps, flowers) to Asia and Russia are likely to slow with the sluggishness of the economies of these regions and the end of the bacterial problems facing aquaculture producers in Asia. Exports to Europe will also suffer with the strengthening of the dollar which reduces the competitiveness of local products. The entry into force of a commercial agreement with the EU towards the end of 2016 could however help boost exports. Despite the appreciation of the dollar which is making imports cheaper, these should also fall given the increase in import taxes and duties applied as of March 2015, as well as because of falling domestic demand as the economy slows. The balance of services will remain in deficit, the costs of freight and services paid to foreign companies will exceed tourist income. The income balance is feeling the impact of the significant capital withdrawals and FDI, in decline, will not be enough to finance the current account deficit.


The President Rafael Correa renounces to be a candidate in the next presidential elections

The next presidential and parliamentary elections in Ecuador are scheduled for February 2017. The President, Rafael Correa, of the Alianza Pais (PA) party expressed his wish to not be a candidate. Although the Constitutional amendment allowing him to stand as many times as he wants has been voted, the reform will not go into effect until 2021. The likely candidate expected to succeed him seems to be his former vice president, Lenin Moreno. Maintaining the power of the PA is however not a certainty because government has to deal with divisions that have emerged within his ruling majority and the decline in the government popularity. The budget cutbacks because of the low oil prices are also going to feed into any re-emergence of social discord in 2016.

The business climate is likely to remain mediocre despite the adoption of the reforms, tax incentives, aimed at attracting private investment. The lack of recourse to international arbitration courts, State interventionism, as well as the ongoing fall in commodity prices are all reducing the attractiveness of the country. 


Last update: January 2016

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