Ecuador PESTLE Insights – A Macroeconomic Outlook Report

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Ecuador PESTLE Insights Report Overview

Ecuador ranked 99th out of 153 nations in the GCRI Q3 2023. The country’s GDP was $118.6 billion in 2023.   Ecuador experienced commendable economic growth in 2023, paving the way for future development. The outlook for 2024 is even more promising, with an expected growth rate of more than 1%. This upswing can be primarily attributed to an increase in public consumption, driven by the advantageous scenario of lower commodity prices.

Key Sector’s Contribution to the Ecuador Economy (2019-2026)

Key Sector’s Contribution to the Ecuador Economy (2019-2026)

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GDP in 2023 $118.6 Billion
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Ecuador Macroeconomic Outlook - PESTLE Insights

Political Landscape

Ecuador faces significant political challenges as President-elect Daniel Noboa seeks to strengthen the private sector’s role in the economy. In the backdrop of a fragmented National Assembly and minimal political backing, enacting crucial reforms becomes intricate. Noboa’s aspiration to attract foreign investment and elevate the private sector encounters obstacles from societal pressures, potential resistance from indigenous communities, and a weakened fiscal stance.

Economic Landscape

Ecuador’s growth slowed in 2023 as compared to 2022, owing to factors such as high international interest rates, political uncertainty, rising crime rates, and limited progress in growth-oriented reforms. Achieving the country’s growth and poverty reduction goals necessitates the establishment of macroeconomic stability, mitigating security concerns, enhancing the business environment, minimizing informality, and addressing challenges in sectors with competitive advantages.

Social Landscape

As of January 2024, Ecuador is experiencing an increase in violence linked to organized crime, prompting the government to declare a 60-day state of emergency and an “internal armed conflict.” Violent incidents, including car burnings and explosions, have occurred, resulting in at least 12 deaths. In January 2024, Ecuador’s President Daniel Noboa announced plans to hold a referendum on imposing tighter security measures in response to rising violence in the country.

Technological Landscape

In August 2022, Ecuador’s Ministry for Telecommunications, and Information Society (Mintel) unveiled its Digital Transformation Agenda 2022–2025 to narrow the digital divide and advance government digitization, e-commerce, and security. The comprehensive agenda is structured around seven key pillars, prominently featuring digital infrastructure, the digital economy, and digital security.

Legal Landscape

In December 2023, Ecuador’s National Assembly approved the Private Security and Surveillance Law to combat the rising crime rate in the country. The law aims to strengthen and regulate the private security and surveillance industry, covering services for the protection of individuals, personal property, and assets. It includes provisions for the training of security guards, licenses to carry weapons, and regulations to safeguard the rights of workers in the private security sector.

Environmental Landscape

The Yacuri National Park in Ecuador, one of the youngest in the country, has expanded by over 5,000 hectares (ha) towards the southern border with Peru. The expansion is a result of collaboration between the Conserva Aves consortium and the Ecuadorian Ministry of the Environment. The park, a Key Biodiversity Area, is home to various species, including the endangered Andean Condor. The expansion is a commitment from the Ecuadorian government to protect biodiversity and ecosystem services critical for climate regulation.

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Scope

Ecuador’s Ministry of Transport and Public Works intends to increase private participation in the state road network from 17% to 40% by May 2025, with tenders prepared for 12 projects, including four high-priority ones, involving a total investment exceeding $1 billion.

Key Highlights

The Ecuador ECUINDEX exhibited a downward trend over the past year. As of January 9, 2024, the index stood at 1,172.9, compared to 1,265.9 on January 9, 2023.

Reasons to Buy

  • Macroeconomic Outlook Report identifies the potential of the country as an investment destination by analyzing the political, economic, social, technological, legal, and environmental (PESTLE) structure.
  • PESTLE Insights provides a 360-degree view of the economy which can be used as a strategic tool to understand the market dynamics, business potentials, and direction of operations
  • Along with providing the country’s snapshot, the report captures the risk factors regarding the macroeconomic risks, political environment, legal environment, demographic and social structure effectiveness, technology & infrastructure, and natural and geographic aspects that might impact business.
  • This report also highlights key clusters/cities which contribute significantly to the country’s GDP and population along with major companies’ presence in these areas.

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Table of Contents

List of Exhibits

Did You Know?

Country Highlights

Key Economic Updates

Country Snapshot

Political Landscape

Economic Landscape

Social Landscape

Technological Landscape

Legal Landscape

Environmental Landscape

Outlook

Table

Exhibit 1: Ecuador’s performance in terms of its country risk analysis in comparison to Latin America and the world average

Exhibit 2: Performance overview (score: 0–100)

Exhibit 3: Broad categories and weights behind the index

Exhibit 4: ECUINDEX Index

Exhibit 5: Key sectors’ contribution to the economy

Exhibit 6: FDI inflows and FDI inward stock (2018–22)

Exhibit 7: Greenfield FDI projects and net cross border M&A deals (2018–22)

Exhibit 8: Key infrastructure indicators

Exhibit 9: Real GDP and household consumption growth rate (2019–26f)

Exhibit 10: Real GDP growth rate comparison (2023e)

Exhibit 11: Volume of exports and imports growth (2019–26f)

Exhibit 12: Current account balance (2019–26f)

Exhibit 13: Top three commodity exports, % of total exports (2018–22)

Exhibit 14: Mineral fuels, mineral oils and products of their distillation export, % of world total (2022)

Exhibit 15: Interest rates (January 2020 – January 2024)

Exhibit 16: Exchange rate and inflation (2019–26f)

Exhibit 17: General government deficit (2019–26f)

Exhibit 18: General government debt (2019–26f)

Exhibit 19: Unemployment rate (2019–26f)

Exhibit 20: Labor force participation rate (2019–26f)

Exhibit 21: Average annual wages (2019–26f)

Exhibit 22: Rural/urban share of total population (1995, 2005, 2015, 2025f)

Exhibit 23: Age-group share of total population (2005, 2015, 2025f)

Exhibit 24: Gender split (1995, 2005, 2015, 2025f)

Exhibit 25: Internet users as a percentage of total population, mobile penetration rate and broadband penetration rate (2023e)

Exhibit 26: Number of patents granted per million population (2022)

Exhibit 27: High-technology exports, % of manufactured exports (2022)

Exhibit 28: Rule of law (rankings) 2023

Exhibit 29: Corruption perceptions index (rankings) (2022)

Exhibit 30: Renewable energy capacity (2018–23)

Exhibit 31: CO2 emissions (2018–22)

Figures

List of Figures

Exhibit 1: Ecuador’s performance in terms of its country risk analysis in comparison to Latin America and the world average

Exhibit 2: Performance overview (Score: 1–100)

Exhibit 3: Broad categories and weights behind the index

Exhibit 4: ECUINDEX Index (December 2021 – December 2022)

Exhibit 5: Key sectors’ contribution to the economy (2017–24f)

Exhibit 6: FDI inflows, and FDI inward stock (2017–21)

Exhibit 7: Greenfield FDI projects and net cross border M&As purchase deals in Ecuador (2017–21)

Exhibit 8: Key infrastructure indicators

Exhibit 9: Real GDP and household consumption growth rate (2017–24f)

Exhibit 10: Real GDP growth rate comparison (2021)

Exhibit 11: Export, import and trade balance (2017–24f)

Exhibit 12: Current account balance (2017–24f)

Exhibit 13: Top three commodity exports, % of total exports (2017–21)

Exhibit 14: Mineral fuels, mineral oils and products of their distillation, % of world total exports (2021)

Exhibit 15: Interest rates (January 2017 – November 2022)

Exhibit 16: Exchange rate (2017–24f))

Exhibit 17: Public finance (2017–24f)f)

Exhibit 18: General government debt (2017–24f)

Exhibit 19: Unemployment (2017–24f)

Exhibit 20: Average annual wages (2017–24f)

Exhibit 21: Labor force participation rate (2017–24f)

Exhibit 22: Rural/urban share of total population (1995, 2005, 2015, 2025)

Exhibit 23: Age-group share of total population (1995, 2005, 2015, 2025)

Exhibit 24: Gender split (1995, 2005, 2015, 2025)

Exhibit 25: Internet users as a percentage of total population, mobile penetration rate and broadband penetration rate (2021)

Exhibit 26: Number of patents granted per million population (2021)

Exhibit 27: High-technology exports (% of manufactured exports) (2021)

Exhibit 28: Doing business in Ecuador 2020

Exhibit 29: Corruption perceptions index (rankings) (2021)

Exhibit 30: CO2 emissions (2017–21)

Frequently asked questions

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