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In the midst of the presidential elections, Ecuadorian business associations raise the urgent need to change the country’s economic and commercial policy to strengthen exports to main trading partners such as the United States and the European Union.
Although the economy of the South American country maintains a path of sustained growth, controlled inflation and a single-digit unemployment rate, for the private sector, insecurity and political uncertainty end up affecting the performance of the productive sector.
A key factor, from the union perspective, is the cohesion between the new government and businessmen, as stated by the executive president of the Ecuadorian American Chamber of Commerce (Amcham), Felipe Espinosa, who believes that “we have to rebuild faith in the country and know that we can move forward and that it is a joint effort for everyone. The team that can be formed between the private sector and the public sector should be the one that can move things forward.”
In the context of the economic challenges facing Ecuador, the union leader considers that the institutions are broken: “unfortunately, the institutions in the country have not allowed us to be successful. We have to recover the institutionality.”
Despite a rarefied political panorama, which includes the recent assassination of a presidential candidate, economic data confirms the path of growth. According to the Central Bank of Ecuador, in the second quarter of 2023 the Gross Domestic Product (GDP) grew 3.3% compared to the same period of the previous year, driven mainly by the increase in government spending by 6.4% and household consumption by 4.3%.
The effect of insecurity on the economy
When asked about the economic impact of the growing wave of insecurity in the midst of the electoral contest, Amcham’s spokesperson in Ecuador said that “the cost has not only been for large businessmen, who have had to take measures, but also for the small ones, the owners of establishments, where they charge ‘vaccinations’ (extortion) and sporadic visits from thugs.”
He added that “the costs are very great and they occur because people feel that this is the way to go with paying for vaccines or private security.”
And despite the security difficulties and political instability implied by early elections, Ecuador reports low unemployment rates, which have remained stable. According to the National Institute of Statistics and Censuses (INEC), while last May the unemployment rate was 3.2%; in June, 3.8%; in July, 3.7%; and in August, 3.5%.
However, the same INEC has recorded that poverty in Ecuador reaches 27% of the population. This rate is equivalent to 4.8 million people, that is, almost a quarter of the total population, estimated at 18.3 million people.
Ecuadorian businessmen are also concerned about the future of private investment. Espinosa stated that, “both foreign and local investment have fallen. Uncertainty is one of the main factors. Knowing what is going to happen in such a strange and different environment from a cross death, and after new elections in such a short time.”
“I believe that the new Government has to focus on short-term actions. This will be a short-term Government that requires delivering results very quickly. For example, we should increase our exports to the markets we are already reaching and those exports should grow very significantly,” Espinosa stated.
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