After having recovered from the effects of the global crisis, Ecuador’s economy reached a robust 7,9% growth in 2011. In 2012 and 2013 growth decelerated moderately yet it maintained strong with rates of 5,2% and 4,6%, respectively. During the first quarter of 2014 this strength has maintained with an annual GDP growth of 4,9%.
The government of President Rafael Correa Delgado—who was re-elected for a new 4-year mandate in February by an ample margin of votes —maintains the double priority of eradicating poverty and amending the productive matrix for changing, thus, the country’s productive structure and to generate an economy sustainable and diversified oriented to knowledge and innovation. With this double priority, the public sector’s expense and investment have increased from 21% of the GDP in 2006 to 44% in 2013. A vast part of these resources was destined to both investment programs and projects in energy, infrastructure, and transportation, as well as in social sectors.
Economic growth in Ecuador has been inclusive, which has directly reduced poverty and inequality levels and increased the middle class. Between 2006 and June 2014, poverty measured by income (using the national poverty line) decreased from 37,6% to 24,5%, whilst extreme poverty was reduced from 16,9% to 8%.
In addition, the inequality reduction has been quicker than in the region’s average: The Gini’s coefficient was reduced from 54 to 48,6 between 2006 and June 2014, since growth benefitted more the poorest. Between 2000 and 2011 a more pronounced increase of the income took place in the two poorest quintiles. In fact, the income of the poorest 40% of the population increased in 8,8%, compared with the average 5,8% of the country.
Despite these remarkable outcomes, there is still a lot to be done to sustain and to enlarge the achievements reached in poverty reduction and inequality, as well as of the economic growth. Among the challenges are the reduction of inequality and poverty, because although the significant decrease, poverty levels are still much higher in the rural areas. On the other hand, an international environment of progressive economic deceleration also presumes another challenge for Ecuador. The dependency not only of the trade balance but of the public investment financing of the oil sector are important facts that the country has to consider. Notwithstanding it is expected that the economic growth maintains strong with rates somewhat exceeding 4% in 2014 and 2015.
Last Updated: Nov 05, 2014