Economic overview
Oil is king in the Ecuadorean economy, making up more than half of the country’s export earnings. In 2011, growth hit 7.8% before slowing as oil prices dropped worldwide. The government expects to report 2013 growth of between 3.7% and 4%.
China has become Ecuador’s largest source of financing, stepping up with capital after Ecuador defaulted on its global bonds in 2008. China provided an estimated 60% of Ecuador’s $6.2 billion in financing needs in 2013. In exchange, the Asian powerhouse can claim as much as 90% of Ecuador’s oil shipments over the next few years. As the relationship between Ecuador and China has strengthened, the Latin American country’s ties to the U.S. have waned. In December, the U.S. Agency for International Development announced plans to leave Ecuador because of an impasse with the government.
Business travel industry insight
The capital Quito, often a gateway to other Ecuadorian cities, has a new international airport in the suburbs. It offers expanded cargo facilities and an extended runway that makes landing in the mountainous area less nerve-wracking than at the old airport in the city’s center. In 2016, Quito plans to open a US$35 million convention center. The government’s efforts to improve public transportation and safety have paved the way for private investment in hotels. Ecuador’s official currency is the U.S. dollar, but travelers should be prepared to use small bills because it can be difficult to exchange or get change for large banknotes.
Opportunities
- Ecuador’s public investment jumped from 21% of gross domestic product in 2006 to nearly 42% in 2012, bankrolling infrastructure projects that benefit business and the larger population.
- The government has announced plans to return to international debt markets, marking a recovery from its $3.2 billion bond default in 2008.
- Economic growth has helped reduce poverty and boost the country’s middle class. Between 2006 and 2012, extreme poverty in Ecuador declined from 16.9% to 11.2%, according to the World Bank.
Challenges
- The economy is not well diversified; public investments that have improved the country’s infrastructure largely depend on the oil sector.
- The government has announced its intent to withdraw from some bilateral investment treaties, generating economic uncertainty and discouraging some private investment.
- Despite inroads, more than half of the Ecuadorean population continues to live in or is vulnerable to poverty.
When your business expands into new markets, BCD Travel can get your travelers where they need to be. Talk to your account manager about how we can support your company’s growth across the globe.
