The Ecuadorean economy
Ecuador has a developing economy that is highly dependent on commodities, namely petroleum and agricultural products. The country is classified as an upper-middle-income country. Ecuador's economy is the eighth largest in Latin America and experienced an average growth of 4.6% between 2000 and 2006. From 2007 to 2012, Ecuador's GDP grew at an annual average of 4.3 percent, above the average for Latin America and the Caribbean, which was 3.5%, according to the United Nations' Economic Commission for Latin American and the Caribbean (ECLAC). Ecuador was able to maintain relatively superior growth during the crisis. In January 2009, the Central Bank of Ecuador (BCE) put the 2010 growth forecast at 6.88%. In 2011, its GDP grew at 8% and ranked third highest in Latin America, behind Argentina (2nd) and Panama (1st). Between 1999 and 2007, GDP doubled, reaching $65,490 million according to BCE. The inflation rate until January 2008, was about 1.14%, the highest in the past year, according to the government.
The monthly unemployment rate remained at about 6 and 8 percent from December 2007 until September 2008; however, it went up to about 9 percent in October and dropped again in November 2008 to 8 percent. Unemployment mean annual rate for 2009 in Ecuador was 8.5% because the global economic crisis continued to affect the Latin American economies. From this point, unemployment rates started a downward trend: 7.6% in 2010, 6.0% in 2011, and 4.8% in 2012.
The extreme poverty rate declined significantly between 1999 and 2010. In 2001, it was estimated at 40% of the population, while by 2011 the figure dropped to 17.4% of the total population. This is explained to an extent by emigration and the economic stability achieved after adopting the U.S. dollar as official means of transaction (before 2000, the Ecuadorian sucre was prone to rampant inflation). However, starting in 2008, with the bad economic performance of the nations where most Ecuadorian emigrants work, the reduction of poverty has been realized through social spending, mainly in education and health.
Oil accounts for 40% of exports and contributes to maintaining a positive trade balance. Since the late 1960s, the exploitation of oil increased production, and proven reserves are estimated at 6.51 billion barrels as of 2011. In late 2021, Ecuador had to declare a Force majeure for oil exports due to erosion near key pipelines (privately owned OCP pipeline and state-owned SOTE pipeline) in the Amazon. It lasted about three weeks, totalling just over $500 million economic losses, before their production returned to its normal level of 435,000 barrels per day (69,200 m3/d) in early 2022.
The overall trade balance for August 2012 was a surplus of almost $390 million for the first six months of 2012, a huge figure compared with that of 2007, which reached only $5.7 million; the surplus had risen by about $425 million compared to 2006. The oil trade balance positive had revenues of $3.295 million in 2008, while non-oil was negative, amounting to $2.842 million. The trade balance with the United States, Chile, the European Union, Bolivia, Peru, Brazil, and Mexico is positive. The trade balance with Argentina, Colombia, and Asia is negative.
In the agricultural sector, Ecuador is a major exporter of bananas (first place worldwide in export), flowers, and the seventh largest producer of cocoa. Ecuador also produces coffee, rice, potatoes, cassava (manioc, tapioca), plantains and sugarcane; cattle, sheep, pigs, beef, pork and dairy products; fish, and shrimp; and balsa wood. The country's vast resources include large amounts of timber across the country, like eucalyptus and mangroves. Pines and cedars are planted in the region of La Sierra and walnuts, rosemary, and balsa wood in the Guayas River Basin. The industry is concentrated mainly in Guayaquil, the largest industrial center, and in Quito, where in recent years the industry has grown considerably. This city is also the largest business center of the country. Industrial production is directed primarily to the domestic market.[citation needed] Despite this, there is limited export of products produced or processed industrially. These include canned foods, liquor, jewelry, furniture, and more.[citation needed] A minor industrial activity is also concentrated in Cuenca. Incomes from tourism has been increasing during the last few years due to promotion programs from Government, highlighting the variety of climates and the biodiversity of Ecuador.
Ecuador has negotiated bilateral treaties with other countries, besides belonging to the Andean Community of Nations, and an associate member of Mercosur. It also serves on the World Trade Organization (WTO), in addition to the Inter-American Development Bank (IDB), World Bank, International Monetary Fund (IMF), CAF – Development Bank of Latin America and the Caribbean and other multilateral agencies. In April 2007, Ecuador paid off its debt to the IMF. The public finance of Ecuador consists of the Central Bank of Ecuador (BCE), the National Development Bank (BNF), the State Bank.
The monthly unemployment rate remained at about 6 and 8 percent from December 2007 until September 2008; however, it went up to about 9 percent in October and dropped again in November 2008 to 8 percent. Unemployment mean annual rate for 2009 in Ecuador was 8.5% because the global economic crisis continued to affect the Latin American economies. From this point, unemployment rates started a downward trend: 7.6% in 2010, 6.0% in 2011, and 4.8% in 2012.
The extreme poverty rate declined significantly between 1999 and 2010. In 2001, it was estimated at 40% of the population, while by 2011 the figure dropped to 17.4% of the total population. This is explained to an extent by emigration and the economic stability achieved after adopting the U.S. dollar as official means of transaction (before 2000, the Ecuadorian sucre was prone to rampant inflation). However, starting in 2008, with the bad economic performance of the nations where most Ecuadorian emigrants work, the reduction of poverty has been realized through social spending, mainly in education and health.
Oil accounts for 40% of exports and contributes to maintaining a positive trade balance. Since the late 1960s, the exploitation of oil increased production, and proven reserves are estimated at 6.51 billion barrels as of 2011. In late 2021, Ecuador had to declare a Force majeure for oil exports due to erosion near key pipelines (privately owned OCP pipeline and state-owned SOTE pipeline) in the Amazon. It lasted about three weeks, totalling just over $500 million economic losses, before their production returned to its normal level of 435,000 barrels per day (69,200 m3/d) in early 2022.
The overall trade balance for August 2012 was a surplus of almost $390 million for the first six months of 2012, a huge figure compared with that of 2007, which reached only $5.7 million; the surplus had risen by about $425 million compared to 2006. The oil trade balance positive had revenues of $3.295 million in 2008, while non-oil was negative, amounting to $2.842 million. The trade balance with the United States, Chile, the European Union, Bolivia, Peru, Brazil, and Mexico is positive. The trade balance with Argentina, Colombia, and Asia is negative.
In the agricultural sector, Ecuador is a major exporter of bananas (first place worldwide in export), flowers, and the seventh largest producer of cocoa. Ecuador also produces coffee, rice, potatoes, cassava (manioc, tapioca), plantains and sugarcane; cattle, sheep, pigs, beef, pork and dairy products; fish, and shrimp; and balsa wood. The country's vast resources include large amounts of timber across the country, like eucalyptus and mangroves. Pines and cedars are planted in the region of La Sierra and walnuts, rosemary, and balsa wood in the Guayas River Basin. The industry is concentrated mainly in Guayaquil, the largest industrial center, and in Quito, where in recent years the industry has grown considerably. This city is also the largest business center of the country. Industrial production is directed primarily to the domestic market.[citation needed] Despite this, there is limited export of products produced or processed industrially. These include canned foods, liquor, jewelry, furniture, and more.[citation needed] A minor industrial activity is also concentrated in Cuenca. Incomes from tourism has been increasing during the last few years due to promotion programs from Government, highlighting the variety of climates and the biodiversity of Ecuador.
Ecuador has negotiated bilateral treaties with other countries, besides belonging to the Andean Community of Nations, and an associate member of Mercosur. It also serves on the World Trade Organization (WTO), in addition to the Inter-American Development Bank (IDB), World Bank, International Monetary Fund (IMF), CAF – Development Bank of Latin America and the Caribbean and other multilateral agencies. In April 2007, Ecuador paid off its debt to the IMF. The public finance of Ecuador consists of the Central Bank of Ecuador (BCE), the National Development Bank (BNF), the State Bank.
