Ecuador Economy

Ecuador Economy


  • Basic data
  • Public finances and the state budget
  • Banking system
  • Tax System

Basic data

According to the predictions of the central bank, the Ecuadorian economy will grow by 3.55% in 2021. The main reasons for the growth: progressing vaccination against Covid-19, improved access to credit, revival of exports of oil and oil products as well as exports of non-oil items, and a greater inflow of “remesas” (money sent by Ecuadorians from abroad). These factors gave impetus to higher household consumption (4.6%) and investment. Oil processing (22.7%), fishing (13.9%), shrimp farming (10.9%), trade (7.9%) and telecommunications (6.7%) recorded the largest increases. GDP growth of 2.54% is estimated for 2022, thanks to investments (growth of 4.9%), mainly in the mining industry, exports (growth of 3.3%) and household consumption (growth of %). In the first quarter of 2021, the BÚ registered a balance of payments surplus of USD 72 million, which is USD 517.5 million more than in the same period of the previous year. For January – October 2021, total exports reached 21.5585 billion USD. Compared to the same period last year, this represents an increase of 31.0%. Of this, the export value of oil and oil products amounted to 7.4907 billion USD. The most important non-oil exports were shrimp, bananas, canned fish, flowers and cocoa. The largest trading partners were the USA, China, Russia, Colombia and Spain. On the contrary, total imports represented USD 19.2265 billion, of which non-oil products accounted for USD 15.5634 billion. Raw materials accounted for the largest share of imports (7.2814 billion USD). Due to higher oil prices on world markets, better tax collection and reduced public spending, the state budget deficit is estimated at around USD billion. In September 2021, Ecuador signed an agreement with the IMF, thanks to which it will receive 6 billion USD in 2021 and the following period as help to revive the economy. In 2020, the previous government of Lenin Moreno concluded a loan agreement with the IMF for 27 months in the amount of billion USD. The condition for obtaining the money was the introduction of reforms, such as tax, employment or improving the fight against corruption. President Lasso pushed through the Economic Development and Fiscal Sustainability Act. The tax reform is expected to increase treasury revenues by USD billion over the next 2 years. The BID will provide $400 million in guarantees to Ecuador. CAF and the Ministry of Finance signed an agreement to provide 2 loans totaling 325 million USD, which will be used for economic recovery and vaccination. In the first quarter of 2022, Ecuador wants to issue government bonds again. The funds obtained should be primarily intended for the development of infrastructure. Foreign direct investments in the first quarter of 2021 amounted to USD 249.0 million (share of GDP 0.99%), in the second quarter it was USD 11 million. USD (share of GDP 0.44%). In the period April – June, the largest part went to services, followed by construction and manufacturing; by origin, FDI came from Switzerland, Mexico and the USA. Foreign exchange reserves reached USD 8.13 billion as of November 18, 2021. Year-on-year inflation reached 1.84% in November 2021. The official unemployment rate in October was 4.57%. Check ebizdir for economical facts of Ecuador.

Pointer 2019 2020 2021 2022 2023
GDP growth (%) 0 -7.6 3.8 1.8 1.9
GDP/population (USD/PPP) 12,025.70 11,031.60 11,650.00 12,210.00 12,600.0
Inflation (%) 0.3 -0.3 0.1 2 1.2
Unemployment (%) 4.4 8.1 4.8 4.7 4.6
Export of goods (billion USD) 22.3 20.2 26.7 29.7 30.3
Import of goods (billion USD) 22.6 18 25.7 26.9 28
Trade Balance (Billion USD) 1 3.4 0.6 2.2 1.7
Industrial production (% change) 0.2 -5 3 2.8 2
Population (millions) 17.3 17.5 17.8 18 18.2
Competitiveness ON ON ON ON ON
OECD export risk 07.VII 07.VII 07.VII ON ON

Source: EIU, OECD, IMD

Public finance and state budget

Public finance 2021
State budget balance (% of GDP) -2.6
Public debt (% of GDP) 66.5
Current account balance (billion USD) 0.8
Taxes 2022
VAT (% of GDP) 5%

Ecuador initially expected a budget deficit of USD 4.81268 billion (4.6% of GDP) for 2021. Due to higher oil prices on world markets, better tax collection and reduced public spending, the deficit is estimated at around USD billion.

For 2022, revenues of $24.115 billion and expenditures of $27.898 billion were approved. The deficit therefore represents USD 3.783 billion. Tax revenues should amount to USD 13.418 billion.

In the first quarter of 2021, the current account of the balance of payments registered a surplus of USD 72million, which is USD 517.5 million more than in the same period of the previous year. Foreign exchange reserves reached USD 8.13 billion as of November 18, 2021. Public debt was USD 62.376 billion as of 12/31/2021, which represents 59.18% of GDP.

Note to the table: separate data on personal and corporate income taxes could not be found. It is expected that in 2022 the share of income tax (both natural and legal persons combined) in GDP will be 4.3%.

Banking system

The central and issuing bank is Banco Central del Ecuador, other state banks: Banco de Desarrollo del Ecuador (BDE), National Finance Corporation (CFN) and BanEcuador (formerly Banco Nacional de Fomento).

Banks are supervised by the Superintendencia de Bancos del Ecuador.

The most important commercial banks:

  • Banco del Pichincha – part of one of the largest investment groups in the country
  • Banco Internacional
  • Banco Guayaquil
  • Banco Bolivariano – Grupo Financiero Bolivariano
  • Banco del Pacífico – Grupo Banco del Pacífico

Due to the dollarization of the economy, the central bank has a limited field of action.

Overall, the banking sector has little resistance to a possible shock caused by a lack of liquidity.

Tax system

Basic taxes:

  • corporate income tax – companies with national or foreign capital established in Ecuador and branches that have taxable income are subject to a rate of 25% from 2018 after deducting explicitly stated costs (mainly renewal investments). Under certain circumstances, it can amount to 28% (partners in tax havens, etc.),
  • personal income tax – this is progressive taxation from 0% – 35%. Natural persons can also use so-called special deductions,
  • VAT – the basic value added tax is 12%. Some products (basic food, medicines) and services (health care, education, transport services) will not be taxed,
  • foreign currency transfer tax – 5% tax on all transfers sent abroad. This tax is subject to a number of exceptions, especially in connection with registered foreign investments. There is currently talk of abolishing this tax in order to promote the competitiveness of Ecuadorian products,
  • consumption tax – a tax on specific goods (e.g. sweet drinks, alcohol, tobacco products, video games, television and telephone services, cars and other means of transport, etc.). It ranges from 0% on the import of the cheapest hybrid cars to 300% on guns and ammunition for private use.

Ecuador Economy