Ecuador Economic Forecast

By: EconomyWatch Content Team   Date: 10 June 2010

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Ecuador’s economy is largely dependent on oil and gas resources. In fact, these resources account for approximately 50% of the country’s export revenue, as well as 25% of earnings for public sectors. Unfortunately, in 1999 and 2000, this country experienced a horrific economic crisis, a time when the Gross Domestic Product or GDP had decreased by as much as 6%. At that time, financial services offered by banks and financial institutions collapsed, poverty increased dramatically, and as a result, public state debt to outside resources was defaulted on. To help Ecuador’s economic struggles, a number of structural reforms were approved by Congress in March of 2000. In addition, it was determined that Ecuador would start to use the United States dollar as currency. With this, the economy began to stabilize, which in return led to growth aided by high prices for oil and gas. Other things that helped boost this country’s economy included an increase of nontraditional exports and remittance inflows.

Ecuador GDP Forecast

To keep the Gross Domestic Product for Ecuador moving in the right direction, the state imposed revenue taxes on all foreign oil and gas companies. Because of this, the free market for import and export negotiations with the United States was put on hold. As a result, production of oil and gas decreased in 2007. In return, President Correa increased the presence of the default of public debt and carried out threats made in December of 2008 to default on a number of obligations for commercial bonds. All of this has led to economic instability and uncertainty for Ecuador. In looking at the average change for consumer prices in 2008, we can see that the Ecuador GDP (Gross Domestic Product, Current Prices, US Dollar)  was at $54.69 billion in US dollars. From that time to the end of 2009, the numbers did not change much, closing out at $57.03 billion. At that time, Ecuador was at number 65 for world rankings. However, for 2010 and then 2015, forecasters believe the numbers will change to $61.96 billion and $80.823 billion in US dollars respectively.

Ecuador Unemployment Forecast

Currently, the Ecuador population is reported at 14.117 million. Of the 4.77 urban workers, most have jobs in the services sector, followed by industry and then agriculture. In 2008, Ecuador unemployment was relatively low at 7.3% but by the end of 2009, numbers had increased to 9.8%. Considering that the economy for Ecuador is still plagued by several serious challenges, many forecasters believe the Ecuador unemployment rate will continue to climb until changes are made.

Ecuador Inflation Rate Forecast

Now, moving on the forecasts for the Ecuador Inflation Rate , which is based on percentage of change for consumer pricing, 2008 ended at 8.40%. Then by the close of 2009, the numbers changed to 5.41%, which was a reduction of almost 40%, putting the country at number 60 for world ranking. Forecasters are predicting that for 2010, a decrease of approximately 21.57% will be experienced, leaving the inflation rate at 4.00%. Then by 2015, it is expected that the rate will drop to 3%.

Ecuador Current Account Balance Forecast

Another area in which people watch closely is the Ecuador Current Account Balance . For this, experts use all transactions with the exception of financial and capital items, focusing primarily on goods and services, and well as current transfers and income. When 2008 ended, this balance was reported as $1.21 billion in US dollars but with a reduction of 151.87%, 2009 closed at a negative $0.625 billion, putting the country in position 110. Currently, experts are stating that for the end of 2010 the account balance will be 42.72% less at a negative $0.36 billion and by 2015, a more significant change is expected to a negative $2.719 billion in US dollars.


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