Ecuador foreign investement, Pest analysis

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Ecuador PEST analysis,and foreign investment analysis.

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Ecuador foreign investement, Pest analysis

  1. 1. POLITICAL FACTORS Ecuador has been caught in cycles of political instability. Ecuadors political parties have historically been small, loose organizations that depend more on populism. Beginning with the 1996 election, the indigenous population has participated actively in the official political system.
  2. 2.  On January 15, 2007, Rafael Correa was sworn in as President. He enjoys a sustained popularity in all regions of the country and among a broad array of class and demographic groups. President Correas (PAIS) movement is the predominant political force in Ecuador. His government has increased spending on: housing, health care, and other popular social programs. Other Health Housing social care programs
  3. 3. ECONOMIC FACTORS President Correas economic priorities include: Higher social spending Control over strategic sectors A greater share of natural resource revenues for the state.
  4. 4.  The government’s economic policies have created some uncertainty for the business community. The World Economic Forums Global Competitiveness Index rated Ecuador 105th out of 139 countries for 2010-11. The Ecuadorian economy is based on:Petroleum Agricultural Manufacturing Commerceproduction production
  5. 5.  The oil sector typically accounts for 15%-20% of GDP, and 30%-40% of government revenues. With oil contract renegotiations, public and private investment in the sector is expected to increase, along with production levels. In early 2011, government negotiations commenced with mining companies interested in moving from an exploratory phase into production.
  6. 6.  The Ecuadorian Government enacted a Production, Trade, and Investment Code in late 2010. The code is intended to promote production of higher value-added products, in particular by small and medium-sized businesses.
  7. 7.  From 2000 to 2006, growth averaged 4.9% per year. In 2007, economic growth slowed, constrained by declining petroleum production and reduced private sector investment. In 2008, the economy recovered, posting a 7.2% real annual growth. By the end of 2008, the global financial crisis and economic downturn led to falling remittances and declining oil revenue for Ecuador. In December 2008 the government defaulted on certain debt issuances. In June 2009, the government repurchased 91% of the Global bonds, at a 65%-70% discount.
  8. 8.  In 2009, economic growth slowed due to a fall in internal demand As the global economy began to recover in 2010, Ecuador’s economy rebounded with a 3.6% growth rate. The Ecuadorian Government’s official forecast for GDP growth in 2011 is 5.1%
  9. 9. FOREIGN RELATIONS AND INVESTMENTS Ecuador has increased its efforts to strengthen and diversify its political and economic ties with countries in Latin American, Europe, and Asia. His government has signed agreements to promote economic cooperation with: Peru, Chile, Brazil, Argentina, Venezuela, Costa Rica, Panama, Uruguay, Haiti, and Cuba. Similarly ,outside the region, Rafael Correa has signed agreements with Spain, Italy, France, China, Iran, and Russia, among other countries.
  10. 10.  The United States is Ecuadors principal trading partner. In 2010, Ecuador exported about $6.04 billion in products to the U.S., more than a 30% increase over 2009, and accounting for about 35% of Ecuadors total exports. The United States exported $5.4 billion in goods to Ecuador in 2010, a 38% increase over 2009, accounting for about 26% of Ecuadors imports. Ecuador is the 39th-largest market for U.S. exports
  11. 11. IMPORTANT FACTS Ecuador is a growing trend of investment from the conception of aggregate demand accounts. The investment, measured as Gross Fixed Capital Formation (GFCF) represents 25.2% of GDP in 2010. In 2000 it represented just the 20% of GDP.
  12. 12.  Cely,N., Estrategias económicas y comerciales 2011/02. http://www.nathaliecely.com/2011/02/estrategias- economicas-comerciales- y.html#!/2011/02/estrategias-economicas- comerciales-y.html Bureau of Western Hemisphere Affairs ,June 8, 2011, Background Note: Ecuador. http://www.state.gov/r/pa/ei/bgn/35761.htm

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