Tropical Ag- Ecuador:Economics

Economic Performance

Ecuador’s macroeconomic performance was generally positive in recent years, having largely been supported by a favorable external environment. The opening of a new pipeline in October 2003 boosted oil production significantly. As a result, real GDP expanded 6.9 percent in 2004 from 2.7 percent in 2003. Growth remained robust at 4.7 percent in 2005 and 4.2 percent in 2006, driven by high oil prices and strong domestic demand. Inflation has remained in check owing to dollarization, standing at 3 percent in 2005 and 2006. The overall fiscal balance has been in moderated surplus (below 1 percent of GDP in 2005 and 2006), helped by high oil revenues.

Regional Situation

In the context of regional economic development, Ecuador should benefit from structural reform efforts aimed at enhancing external competitiveness to achieve higher, sustainable growth. Despite strong economic and export growth it has experienced in recent years, Ecuador’s overall competitiveness has not improved. In 2006, its position in the World Bank’s Doing Business Index slipped from 120 in 2005 to 123. Also, its position in the World Economic Forum’s Competitiveness Index dropped to 90 in 2006 from 87 in 2005.

As Ecuador is highly dependent on oil exports, mostly to the United States (about 50 percent of its oil exports goes to the U.S.), a free trade agreement (FTA) with the U.S. will be crucial to Ecuador’s efforts in structural reforms to improve competitiveness. However, FTA talks with the U.S. have been frozen since mid-2006 with Ecuador mandating revisions in contract terms and seizure of the assets of Occidental Petroleum Corp., the largest U.S. investor in the country.

Telecommunications 1999 2000 2001 2002 2003 Telecommunications - Number of Main Telephone Line (Mobile Lines (1000s)) 1,129.50 1,224.00 1,336.00 1,426.00 1,549.00 Mail Lines Per 100 Persons (Main Telephone Lines Per 100 Persons) 8.700 9.788 10.518 11.036 11.848 Telecommunications - Population of Cellular Subscr (Mobile cellular subscribers) 391,063.82 476,448.27 847,212.66 1,551,840.20 2,393,864.41

Economic Performance Index

The Economic Performance rankings are calculated by CountryWatch's editorial team, and is based on criteria including sustained economic growth, monetary stability, current account deficits, budget surplus, unemployment and structural imbalances. Scores are assessed from 0 to 100 using this aforementioned criteria as well as CountryWatch's proprietary economic research data and models.

Ecuador’s macroeconomic performance was generally positive in recent years, having largely been supported by a favorable external environment. The opening of a new pipeline in October 2003 boosted oil production significantly. As a result, real GDP expanded 6.9 percent in 2004 from 2.7 percent in 2003. Growth remained robust at 4.7 percent in 2005 and 4.2 percent in 2006, driven by high oil prices and strong domestic demand. Inflation has remained in check owing to dollarization, standing at 3 percent in 2005 and 2006. The overall fiscal balance has been in moderated surplus (below 1 percent of GDP in 2005 and 2006), helped by high oil revenues.