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.
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
ECONOMIC FACTORS President Correas economic priorities include: Higher social spending Control over strategic sectors A greater share of natural resource revenues for the state.
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
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.
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.
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.
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%
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.
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
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.
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