ECONOMY
The Ecuadorian economy is based on petroleum production, manufacturing primarily for the domestic market, and agricultural production for domestic consumption and export. Principal exports are petroleum, bananas, shrimp, flowers, and other primary agricultural products. In 2006, oil accounted for 59% of total export earnings. Ecuador is the world's largest exporter of bananas and plantains (about $1.2 billion in 2006) and a major exporter of shrimp ($588 million in 2006). Exports of nontraditional products such as flowers ($436 million in 2006, a three-fold increase in 10 years) and canned fish ($575 million in 2006) have grown in recent years.
Ecuador's economic performance has been solid since it adopted the dollar as its national currency in 2000, following a major banking crisis and recession in 1999. Since 2000, growth has averaged 4.6% per year, supported by the stability brought by dollarization, high oil prices, strong domestic consumer demand, increased non-traditional exports, and growing remittances ($3 billion a year) from Ecuadorians living abroad. In 2007, economic growth slowed to an estimated 2.65%, while inflation was 3.32% and petroleum and non-petroleum exports expanded. Growth was constrained in 2007 by declining petroleum production and reduced private sector investment. Per capita income has increased from $1,296 in 2000 to an estimated $3,270 in 2007, while the poverty rate fell from 51% in 2000 to 38% in 2006.
Ecuador did not improve its overall competitiveness during this period of economic and export growth. In 2007, it slipped five positions in the World Bank's Doing Business Index (from 123 to 128) and also slipped in the World Economic Forum's Competitiveness Index (from 94 to 103), as other nations moved more aggressively to adapt to globalization.
Though Ecuador has a relative abundance of oil reserves, it has been unable to take full advantage of those resources for its own development. Mismanagement, lack of investment, and corruption in the state-owned oil sector have caused declines in state oil production over the last decade. Overall oil production increased during that period because of growing production by private sector companies, but in 2007 production by the state oil company fell, while that by private sector companies was flat. Commercial disputes as well as judicial and contractual uncertainties have deterred private oil and other companies from investing in the country. The electricity and telecommunications sectors also have similar significant problems. Ecuador was in the final stages of negotiating a free trade agreement (FTA) with the United States, but that progress stalled with an April 2006 hydrocarbons law mandating revisions in contract terms, and the May 2006 seizure of the assets of Occidental Petroleum, at the time the country's largest U.S. investor. Resolution of the Occidental situation is currently pending international arbitration under the terms of the bilateral investment treaty.
President Correa has announced his opposition to resumption of FTA talks with the U.S., citing concerns that Ecuador is not yet sufficiently competitive, especially in sensitive agriculture sectors. Prior to taking office, he said that the Government of Ecuador would only service its external debt obligations after funding domestic social priorities; as of January 2008, the government had met its external debt obligations. In October 2007 the Correa administration decreed that many foreign oil companies operating in Ecuador pay 99% of extraordinary income to the government. The government increased income transfers to the poor and has increased spending on health, education, and basic infrastructure.
GDP: (2008 est.) $48.5 billion; (2007 preliminary) $44.5 billion; (2006) $41.4 billion.
Real annual growth rate: (2008 est.) 4.25%; (2007 preliminary) 2.65%; (2006) 3.9%.
Per capita GDP: (2007) $3,270; (2006) $3,088.
Natural resources: Petroleum, fish, shrimp, timber, gold.
Agriculture, including seafood (6.7% of GDP in 2007): Products--bananas, seafood, flowers, coffee, cacao, sugar, tropical fruits, palm oil, palm hearts, rice, corn, and livestock.
Industry (9.1% of GDP in 2007; oil and mining 21.9% in 2007): Types--petroleum extraction, food processing, wood products, textiles, chemicals, and pharmaceuticals.
Other major contributors to GDP: Commercial trade (wholesale and retail)--11.8% (2007); transportation--7.45% (2007); construction--8.5% (2007).
Trade: Exports--$12.48 billion (Jan.-Nov. 2007); $12.7 billion (2006). Types--petroleum, bananas, shrimp, coffee, cut flowers cacao, hemp, wood, fish. Major markets (2007)--U.S. 42%, Latin America 26%, Andean Community 20%, European Union (EU) 13%, and Asia 3%. Imports--$11.2 billion (Jan.-Nov. 2007); $11.3 billion (2006). Types--industrial materials, fuels and lubricants, nondurable consumer goods. Major suppliers (Jan.-Nov. 2007)--Latin America 40%, Andean Community 24%, U.S. 21%, Asia 20%, and EU 9%.
Currency: U.S. dollar.
