Ecuador: Economic Outline
For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.
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 the IMF, GDP grew by an estimated 3% in 2022, mainly supported by private consumption amid a stable job market and gross fixed investment. In 2023, the economy is expected to fully recover from the GDP shortfall triggered by the COVID-19 pandemic. As such, GDP is expected to grow by 2.9% in 2023 and remaine stable at 2.8% in 2024.
In 2022, Ecuador's general government balance recorded a slight deficit, with public revenues favoured by a rise in activity and the durably high oil prices. Moreover, inflation stood at 3.5% in 2022, a rate that should decrease to 2.5% in 2023 and 1.5% in 2024. During that period, Ecuador's very low inflation is expected to allow a recovery in private consumption. In 2021, public debt decreased to an estimated 57.3%. Ecuador remains committed to consolidating its macroeconomic stability and preventing an unsustainable rise in debt. The government has committed to reducing public debt in exchange for the IMF financial support of USD 4.2 billion over three years under an extended credit facility obtained in 2019. The austerity measures put in place to reduce public debt include cutting back investments, the obligation to use tenders for public contracts, the phase-out of public jobs through mergers of state-owned entities, and the removal of subsidies on premium gasoline. Furthermore, given the country's high vulnerability to climate change, Ecuador is actively working to mitigate its impacts and, in collaboration with the private sector, dissociate economic growth from greenhouse gas emissions.
The country's unemployment rate decreased to an estimated 4.2% in 2022, and it should further decrease to 4% in 2023. 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. The main challenges the country faces are the diversification of its economy and the training of a more qualified labour force. Moreover, the Ecuadorian economy has to deal with insufficient private investment, corruption in the public sector, poor management of its oil exploitation and the recent climatic disasters.
| Main Indicators | 2020 | 2021 | 2022 (E) | 2023 (E) | 2024 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 99.29 | 106.17 | 116.36 | 121.29 | 126.45 |
| GDP (Constant Prices, Annual % Change) | -7.8 | 4.2 | 3.0 | 2.9 | 2.8 |
| GDP per Capita (USD) | 5,670 | 5,979 | 6,462 | 6,643 | 6,829 |
| General Government Balance (in % of GDP) | -4.4 | 0.2 | -1.3 | 0.0 | 0.0 |
| General Government Gross Debt (in % of GDP) | 60.9 | 62.3 | 57.3 | 0.0 | 0.0 |
| Inflation Rate (%) | -0.3 | 0.1 | 3.5 | 2.5 | 1.5 |
| Current Account (billions USD) | 2.69 | 3.06 | 2.60 | 2.43 | 2.54 |
| Current Account (in % of GDP) | 2.7 | 2.9 | 2.2 | 2.0 | 2.0 |
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 MUR | 0.03 | 0.03 | 0.03 | 0.03 | 0.03 |
Source: World Bank - Latest available data.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 29.7 | 17.2 | 53.0 |
| Value Added (in % of GDP) | 9.4 | 31.2 | 53.4 |
| Value Added (Annual % Change) | 3.4 | 0.5 | 5.8 |
Source: World Bank - Latest available data.
| Socio-Demographic Indicators | 2022 | 2023 (e) | 2024 (e) |
|---|---|---|---|
| Unemployment Rate (%) | 3.8 | 3.6 | 3.6 |
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: September 2023
