With an economic restructuring in business, Ecuador places itself in riding tensions between the United States and China into an economic recovery in 2025.
While many of its neighbors in Latin America benefit from the rear winds after birth-including high commodity prices and prosperity close to the United States-Ecuador continues to struggle. Political instability, energy lack, and an increase in urban violence have undermined investor confidence, which led to a shrinking of 2 % in GDP last year – the worst performance in the region.
The most worrying foreign direct investment (FDI) has collapsed. According to Statista, foreign direct investment decreased by more than 83 % of its peak for the year 2018 of $ 1.39 billion by 2024. The decrease has accelerated in recent years, with a decrease in 46 % on an annual basis in 2023, followed by a decrease of 51 % in 2024, which led to its lowest level at the lowest level since 2010.
| Biomedical statistics |
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| location: south america |
| neighbor: Colombia, Peru |
| Capital: Keto |
| population: 18.1 million (2024) – International Monetary Fund |
| Official language (languages): Spanish |
| GDP to speak: 16,062 dollars (2023) – World Bank |
| GDP growth: -2.0 % (2024), +1.7 % expected (2025) -International Monetary Fund |
| Economic inflation: +0.46 % yearly (April 2025), lower in Latin America – International Monetary Fund, 2025 |
| currency: US dollar |
| Credit classification: Credit Rating: Caa1 (Moody’s); CCC+ (S&P and Fitch Categories) |
| Investment Enhancement Agency: Pro Ecuador, who works as deputy ministry in the Ministry of Production, Foreign Trade, Investments and Fisheries. |
| Available investment incentives: 0 % Capital gain tax until 2030, free trade areas. |
| The rank of corruption perceptions index (2024): 121 of 180 countries – where 180 is the most corrupt. |
| Political risks: Medium |
| Security danger: High |
| Positives |
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| The economy’s recovery with unexploited mining and energy capabilities. |
| The currency risks are not due to the dollar. |
| It carries the lowest rate of inflation in Latin America. |
| cons |
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| The volatile political and social environment. |
| Ecuador has the highest murder in Latin America. |
| It has seen the power outage over the country over the past few years. |
sources: The World Bank, International Monetary Fund, Ecuador Central Bank, MOOOY’s, S& P Global, Fitch Ratings, Ecuador Government, US State Department.
The campaign of the last campaign against organized crime led to some relief on the security front, while the new public and private partnerships (PPPS) began facing the challenges of long -term infrastructure, which revitalizes the long construction sector. Moreover, the 6.55 billion dollar fund facility from the International Monetary Fund, which will continue until 2027, promises monetary support for economic recovery in the country.
Add to this a wave of pro -business reforms that interest the investor, and can distinguish in 2025 from the beginning of a more optimistic separation, along with new opportunities in the country for foreign investors. Since inflation was just less than 0.5 % on an annual basis in April, the central bank in Ecuador and its colleagues now offer a strong year for GDP, as they predict by 2.5 % and 1.7 %, respectively.
However, as Daniel Godli, the chief economist in Brodobanko, notes that the foreign direct investment of Picador “will not multiply significantly … it is a process that must unite the various strategies.”
Delegate the president
He handed him his decisive re -election to President Daniel Nuboa in April, when he obtained nearly 55.6 % of the country’s suitable ballot cards, to the strongest mandate and a majority of an act in the legislature, which allowed him to follow up on a deeper restructuring.
Among his first movements, the 37 -year -old suggested a constitutional amendment that allows the creation of foreign military bases in the country, a sign of greater rapprochement with Washington. It also looks forward to securing greater police capabilities to counter the problem of urban violence.
In terms of business, Nooboa wants to take advantage of the growing PPP portfolio from Ecuador to develop the late infrastructure in the country, which many foreign investors consider a first -class problem. In an attempt to increase foreign direct investment, in April, the government established new free trade areas, Posorja and Pascuales, which covers more than 117 hectares of industrial lands in a strategic location in Gwias Province. This step aims to deepen free trade plans in Nuboa, which started in February last year, with the aim of benefiting from the economy in the dollar in the country.
“The new free trade areas in Ecuador and their tax incentives are welcome signals for investors, especially when they are paired with the stability of the dollar, which removes currency risks,” says Rafael Parisiaskas, senior economists in Latin America at Fastmarkkets.
Mobility in American -Chinese tensions
The complexity of the efforts made to revive foreign direct investment are tensions between the great economic powers, China and the United States.
Last year, despite the diving in foreign direct investment, Chinese investments in Ecuador increased by 58 % on an annual basis, reaching almost half of the total. On the contrary, American investment decreased by 9 % from 2023 levels, which is less than 25 %. This trend may be already deepening this year, with an agreement worth $ 1.2 billion in March with the state -owned Sinopec to develop the Sasha oil field: the biggest commitment in Ecuador in foreign direct investment for years.
If it is well managed, the Ecuador’s position among the global giants can represent a chance, says Parisiacas.
“The American -Chinese trade war has increased the influence in Latin America,” as it is noted, “allowing Ecuador to take advantage of both sides while moving in conflicting standards about transparency, environmental rules, and technology infrastructure.”
Moreover, in February, the government obtained a free trade deal with Canada, which is expected to provide another batch of resource -rich mining sector.
The last Chinese and Canadian deals indicate the revival of powerful energy and mining industries in Ecuador. Through PPPS, Noboa aims to pump about $ 11 billion in the economy over the next few years to process the historically missing power lines and roads. Supported by the Cinopk deal, the government is now offering up to 42 billion dollars of investment from foreign oil companies over the next five years.
Meanwhile, a trilogy of the main projects-Curipamba, La Plata and Loma Larga-are preparing to move to the exploitation stage, which represents nearly a billion dollars in capital flows close to the range. If the momentum continues, the mining may become the third largest export category in the country this year, with the possibility of generating more than $ 4 billion annually.
Other non -manufactured exports, such as bananas, shrimp, and flowers, are also expected to spread in 2025, supported by strong demand in the American and European markets, despite the global opposite winds. Godoy says that other sectors have “great potential”, which include agriculture, tourism, trade and environmental protection.
Godoy from Produbanco also highlights the importance of the country’s flexible banking sector for the broader apostasy.
“There are at least three factors that determine the (banking sector) site to support economic recovery: strong profitability measures, control risk of control, and available local and international financing.” Although the gross domestic product of the past year shrinks, production credit recorded an annual growth of 9.8 % at the end of 2024, with an ascending trend, any annual growth rate of 15.4 % at the end of May 2025. “
Given the expected multi -sectors recovery, Ecuador is now expected to secure a $ 3 billion commercial surplus this year, which improves the current account deficit in the country and opened the door for further debt issuance and support for the International Monetary Fund.
Infrastructure problems
Even with apparently improved economic conditions, constant change may continue to depend on deeper improvements in the framework of work and infrastructure of the country.
“Compared to their regional peers such as Mexico and Costa Rica, which combines effective logistical services, reliable infrastructure, skilled employment, and organizational transparency with strong integration in global value chains, Ecuador still has progress in achieving,” he argues with Parisias.
According to the Ecuador Municipality for Investments between the public and private sectors, a huge $ 72 billion is needed until 2030 to improve the current infrastructure, energy, communications, water and sanitation infrastructure. The number represents approximately 59 % of the country’s gross domestic product as of last year. Transportation and energy are the areas that require a new, comprehensive investment, according to the Secretariat, at $ 23 billion and $ 21 billion, respectively.
Parisayskas warns: “Ecuador must upgrade the infrastructure of transportation and transportation, simplifying regulations, and taking advantage of the confidence that comes from its dollar system to compete.”
Judoui adds that the bounce in foreign direct investment also depends on support from local investors.
“How can we convince an international investor to invest in Ecuador if the locals themselves do not allocate resources to generate and implement investment projects?” He says. “We need more local entrepreneurs, and more diversification.”
