Ecuador Country Risk Report Q4 2019
We at Fitch Solutions expect the Ecuadorian economy to contract over the coming quarters, as government austerity measures curtail consumption and un-dermine investment. Policy uncertainty presents an additional risk, as President Lenín Moreno's reform efforts face opposition.
We maintain our forecast for real GDP growth to fall 0.2% in 2019 and expand 0.4% in 2020.
Over the longer term, economic restructuring and an improved investment climate should facilitate increases in productivity and overall growth.
President Lenín Moreno's declining approval ratings will challenge his ability to advance his orthodox economic agenda. Policy uncertainty will likely pose head-winds to investment over the near term, while weakening economic activity will force the administration to focus on measures meant to support employment and household incomes.
Political uncertainty will likely mount as the 2021 general election approaches, where a resurgent right under Jaime Nebot and the Partido Social Cristiano could present a challenge to over a decade of AP rule.
Dollar strength, a downtrend in energy prices and weak domestic demand will keep inflation low in Ecuador. We see no immediate risks to the country's dol-larisation and expect regulatory improvements will support monetary policy credibility.
A USD4.2bn IMF funding package, along with multilateral lending, will shore up Ecuador's near-term financing needs.
- Executive Summary
- Core Views
- Country Risk Summary
- Economic Risk Index
- Political Risk Index
- Economic – SWOT Analysis
- Political – SWOT Analysis
- Economic Outlook
- Economic Growth Outlook
- Austerity Measures Push Ecuador Into Recession
- GDP By Expenditure Outlook
- TABLE: GDP GROWTH FORECASTS
- TABLE: PRIVATE CONSUMPTION FORECASTS
- TABLE: GOVERNMENT CONSUMPTION FORECASTS
- TABLE: FIXED INVESTMENT FORECASTS
- TABLE: NET EXPORT FORECASTS
- Outlook On External Position
- TABLE: TOP FIVE GOODS IMPORTS IN 2018
- TABLE: TOP FIVE GOODS EXPORTS IN 2018
- TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
- TABLE: CURRENT ACCOUNT BALANCE FORECASTS
- Structural Fiscal Position
- TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES (2017)
- TABLE: FISCAL AND PUBLIC DEBT FORECASTS
- Monetary Policy
- Inflation In Ecuador Will Remain Structurally Low
- 10-Year Forecast
- The Ecuadorian Economy To 2028
- Structurally Lower Oil Prices And Business Environment To Weigh On Growth
- TABLE: LONG-TERM MACROECONOMIC FORECASTS
- Ecuador Country Risk Q4 2019THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings’ Credit Rating. Any comments or data included in the report is solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings’ analysts do not share data or information with Fitch Solutions Macro Research.ContentsPolitical Outlook
- Domestic Politics
- Moreno's Declining Approval Undermines Ecuador's Policy Shift
- TABLE: POLITICAL OVERVIEW
- Long-Term Political Outlook
- AP Popularity On The Decline
- Operational Risk
- TABLE: OPERATIONAL RISK
- Labour Costs
- TABLE: LABOUR REGULATIONS GOVERNING FLEXIBILITY OF WORKFORCE
- Legal Environment
- TABLE: BUREAUCRATIC PROCEDURES
- TABLE: BUREAUCRATIC BARRIERS
- Global Macro Outlook
- Potential Policy Missteps Pose The Largest Risk To Global Growth
- TABLE: GLOBAL MACROECONOMIC FORECASTS (2019-2024)
- TABLE: DEVELOPED MARKETS – REAL GDP GROWTH, % y-o-y
- TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
- Index Tables
- TABLE: ECUADOR – MACROECONOMIC DATA AND FORECASTS