Ecuador: Economic Outline
Ecuador is the eighth largest economy in Latin America. However, the country is highly dependent on oil production and vulnerable to global oil prices. According to figures from the National Bank, in 2023, GDP growth stood at 2.4%, down from the 6.2% rate recorded one year earlier. The growth was propelled by the vigor of government expenditure, up by 3.7%; exports, rising by 2.3%; household consumption, increasing by 1.4%; and gross fixed capital formation (GFCF), edging up by 0.5%. Towards the end of 2023, the economy has significantly slowed down due to rising insecurity caused by organized crime, disruptions in oil production, climate-related events, and political uncertainty. The IMF projects growth at 1.8% this year and 2% in 2025.
Concerning public finances, the latest estimates from the Ministry of Finance pointed to a fiscal deficit exceeding USD 5 billion in 2023, reaching around 5% of GDP. The IMF estimated the debt-to-GDP ratio at 55.5% in the same year, with a projected decrease over the forecast horizon (to 52.6% by 2025). The new government, which commenced its 18-month term in November 2023, confronts notable liquidity constraints and a substantial financing shortfall, projected to expand in the absence of structural fiscal reforms in the upcoming years. Ecuador's 2024 budget aims to reduce the fiscal deficit, notwithstanding the pressure to increase spending on security, as the government endeavored to improve its prospects for a deal with the International Monetary Fund. IMF staff and Ecuadorian authorities have reached a staff-level agreement on policies to support a 48-month arrangement under the EFF, totaling approximately USD 4 billion. Pending approval from the IMF Management and Executive Board, this arrangement would bolster Ecuador's economic policies over the next four years. Meanwhile, annual inflation closed December 2023 at 1.35%, according to the National Institute of Statistics and Census (INEC). As per the World Bank, the country must regain capital market confidence and establish fiscal reserves to confront global and climate changes. The public sector must reduce reliance on oil, facing well maturity and a referendum to halt Yasuni National Park operations. Moreover, unlocking growth potential is vital to create quality jobs and resume poverty reduction efforts. This demands political consensus to overcome barriers hindering formal job creation, private investment, and export diversification, including market intervention, limited competition, trade integration, and labor regulations.
The country's unemployment rate decreased to an estimated 3.6% in 2023, from 3.8% one year earlier (World Bank). However, nearly 35% of the population has "non-appropriate", part-time, or unpaid jobs, and with the informal sector accounting for 45% of employment, many households do not receive the minimum wage and full social benefits. Extreme poverty also decreased by 2.3 percentage points since 2021, reaching 8.2% in 2022 (latest data available).
| Main Indicators | 2022 | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 116.59 | 120.18 | 121.59 | 124.41 | 128.73 |
| GDP (Constant Prices, Annual % Change) | 6.2 | 2.3 | 0.1 | 0.8 | 2.0 |
| GDP per Capita (USD) | 6,475 | 6,582 | 6,567 | 6,626 | 6,761 |
| General Government Balance (in % of GDP) | -1.0 | -3.4 | 0.0 | 0.0 | 0.0 |
| General Government Gross Debt (in % of GDP) | 57.0 | 54.7 | 0.0 | 0.0 | 0.0 |
| Inflation Rate (%) | 3.5 | 2.2 | 1.4 | 1.5 | 1.5 |
| Current Account (billions USD) | 2.12 | 1.45 | 1.11 | 1.49 | 1.63 |
| Current Account (in % of GDP) | 1.8 | 1.2 | 0.9 | 1.2 | 1.3 |
Source: IMF – World Economic Outlook Database - October 2021.
Note: (e) Estimated Data
| Monetary Indicators | 2016 | 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|---|---|
| American Dollar (USD) - Average Annual Exchange Rate For 1 GBP | 1.35 | 1.29 | 1.33 | 1.25 | 1.28 |
Source: World Bank - Latest available data.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 32.2 | 16.8 | 51.0 |
| Value Added (in % of GDP) | 8.8 | 31.5 | 53.7 |
| Value Added (Annual % Change) | -1.0 | 1.1 | 4.5 |
Source: World Bank - Latest available data.
| Socio-Demographic Indicators | 2024 (e) | 2025 (e) | 2026 (e) |
|---|---|---|---|
| Unemployment Rate (%) | 4.2 | 4.0 | 3.8 |
Source: IMF – World Economic Outlook Database - Latest available data
| 2018 | 2019 | 2020 | |
|---|---|---|---|
| Labour Force | 8,364,869 | 8,519,410 | 8,019,239 |
Source: International Labour Organization, ILOSTAT database
| 2017 | 2018 | 2019 | |
|---|---|---|---|
| Total activity rate | 71.97% | 71.03% | 70.96% |
| Men activity rate | 84.44% | 83.91% | 83.69% |
| Women activity rate | 59.51% | 58.16% | 58.23% |
Source: International Labour Organization, ILOSTAT database
The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
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The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
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Latest Update: May 2024
