What's New

Overview of Ecuador's economy
Kind: ICD What's New  Organization: Department of International Cooperation  Publish Date: 2021-09-24 09:11
Ecuador is located in the northwest of South America, facing the Pacific Ocean and abutting Columbia and Peru. The nearby Galápagos Islands, listed as a world heritage by the U.N. Educational, Scientific and Cultural Organization (UNESCO), are part of Ecuador’s sovereign territory. Thanks to a tropical climate and rich biodiversity, Ecuador attracts many visitors annually, with tourism ranking as one of the nation’s four biggest sources of foreign exchange earnings.

Industry accounts for 33% of Ecuador’s GDP, while manufacturing accounts for 16% and the service sector accounts for 56%. Ecuador has abundant oil and natural gas reserves, so energy products account for over 50% of the nation’s total exports. In addition, primary industries such as the agricultural, forestry and fishery sectors are Ecuador’s important exporters, with bananas, coffee, cacao and flowers being major export items. Ecuador has also nurtured the development of other sectors such as textiles, food processing and metal products manufacturing; however, high-end precision products like vehicle parts and electronics are mostly imported from other countries.

One of Ecuador’s main economic strategies in recent years has been signing trade agreements with its neighbors; for example, with Guatemala in 2013, El Salvador in 2017, Nicaragua in 2017, and the United Sates in 2020. It has also signed trade pacts with the European Union in 2016, the European Free Trade Association in 2018 and the United Kingdom in 2019, as part of efforts to integrate more into the globalized economy. Moreover, Ecuador has been actively seeking membership in the Pacific Alliance recently.

Another important strategy has been working to end its over-dependence on oil exports by actively promoting industry upgrading and transformation and encouraging more investment in non-oil sectors. Non-oil product exports have grown recently to account for 25% of the country’s total exports.

The International Monetary Fund has required Ecuador to decrease its national debt via increasing tax revenue or cutting expenditures. The government has responded by pre-selling oil and reducing spending on infrastructure construction in order to comply with the IMF’s request and to lessen the impact caused by decreasing government expenditure. Besides, the government intends to gradually share more economic power with the people and facilitate more private-public sector collaboration on economic planning and development.

Sources: Taipei Economic and Cultural Office in Peru; Taiwantrade website.

Update: 2020-04-23
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