Economy of Ecuador

Economy of Ecuador

Until the 1970s, the basis of the economy of Ecuador was agricultural production. A new stage began with the discovery of a large oil field in the east (export since 1972). According to businesscarriers, GDP growth in the 1970s exceeded 10% per year, but the period of prosperity was relatively short. The economy turned out to be very sensitive to fluctuations in oil prices, the growth of domestic consumption did not allow a significant increase in exports. Plans for economic development required large expenditures, and external debt began to increase rapidly. Creditor banks agreed to debt restructuring, subject to the adoption of stabilization measures recommended by the IMF. All R. 1980s Ecuador embarked on the path of neo-liberal reforms, which it follows to this day. The amendments made to the legislation were aimed at the widespread attraction of foreign capital, the liberalization of the financial sector.

Privatization programs met with resistance, and reforms took place amid political instability. In 1997-98, Ecuador suffered heavy losses due to lower oil prices and damage caused by floods caused by El Niño, a periodically changing Pacific current that leads to large temperature fluctuations. In 1999, the most severe crisis in 70 years erupted, 18 banks came under administrative control or state control (4 of them accounted for more than 1/2 of all assets and liabilities of the national banking system), a default was declared on foreign debt bonds, they were replaced for securities with longer maturities. In the beginning. 2000 dollarization was announced as at least an economic recovery.

After a 7.3% decline in GDP in 1999, in 2000 there was an increase of 2.3%, in 2001 the growth rate of 6.0% is the highest in the region, in 2002 they fell to 3.4%. Particularly high growth rates in 2002 were observed in construction (18%), which is associated with the construction of an oil pipeline for transporting heavy oil, and in trade (7%). GDP in 2002 amounted to 24.4 billion US dollars (77th place in the world), per capita – 1394 dollars (129th place). Unemployment in 2000 14.1%, in 2002 – 8.7%; inflation – respectively 91.0 and 9.7%.

The leading mining industry is oil (1.5 million barrels in 2000), sometimes up to 1/2 of the state budget is financed by oil exports. In 1992, Ecuador left OPEC. The throughput capacity of the Trans-Andean oil pipeline did not allow increasing the production and sale of oil. Commissioning of a new oil pipeline – 2nd floor. 2003. In 1998, restrictions on private capital in the oil industry were lifted. Gas, gold, silver, copper are mined.

The most developed branches of the manufacturing industry are the food and textile industries. Enterprises of the leather and footwear, woodworking, pulp and paper, chemical, oil refining, cement industries, in recent years – car assembly enterprises. Folk crafts.

Electricity generation 10,395 billion kWh (2000), incl. 25% – TPP, 75% – HPP. Consumption 9667 billion kWh, per capita – 624 kWh (2000).

In agriculture, arable land occupies 5.7% of the territory, the area under perennial crops – 5.2% (2000), irrigated land – 28.8% of the sown area (1998-2000). The production of food crops in 1989-2001 increased by 56.1%, livestock production by 53.1%.

The leading branch of agriculture is crop production, and in it is the production of bananas (1st place in the world in terms of exports). Cultivated coffee, cocoa, rice, oilseeds, cotton, sugar cane, tobacco (on the coast), potatoes, corn, legumes, barley, wheat, feverfew (in the mountains). The collection of bananas – 6953 thousand tons, coffee – 133 thousand tons, rice – 1355 thousand tons (2000). Of the branches of animal husbandry, poultry farming is the most developed. Cattle, goats, sheep (mainly in the mountains), and pigs are bred.

The waters of Ecuador are rich in fish, seafood, but shrimp farming is of primary importance.

Forests (mahogany, balsa, rubber) occupy 38.1% of the territory (2000), deforestation reaches 1.2% per year.

The main type of transport is automobile, the length of roads is 43.2 thousand km, incl. with a hard surface – 8.2 thousand km (2001). The volume of traffic is 4.2 billion tkm (2000). There are 205 airfields, 61 paved lanes, 144 unpaved. The volume of air traffic in 2001 was 1251 thousand passengers and 14 million tkm. Civil fleet: 33 vessels (with a displacement of 1000 tons and above), including two foreign (Chilean and Greek) under the Ecuadorian flag (2002): 2 container ships, 3 chemical tankers, 1 – for the transport of liquefied gas, 3 passenger, 23 oil tankers and one special tanker. Ports – Guayaquil, Esmeraldas, La Libertad, Manta, Puerto Bolivar, San Lorenzo. Crude oil is transported through a pipeline 800 km long, oil products – 1358 km.

In 2001 there were 104 telephone lines, 67 mobile phones per 1000 inhabitants; 456 radio stations, 5 million radios, 7 television stations and 14 repeaters, 2.5 million televisions. Ecuador has 328,000 Internet users (2002).

The most dynamic in the service sector – trade, restaurants, hotels (an increase of 10.5% in 2001). Between 1990 and 2001 the number of foreign tourists increased from 362,000 to 609,000 people, and revenues increased from $188 million to $430 million.

Before the 1999 crisis, there were 300 financial institutions in Ecuador, including 31 banks, 90% of assets were concentrated in 10 of these institutions. As a result of the collapse of the banking system, its restructuring began, which has not been completed. The largest bank in Ecuador, Filanbanco, which was under state control after the crisis, was liquidated in 2001, and private banks were asked to purchase its assets and liabilities. Another large state-owned bank, Banco del Pacifico, was taken over by a foreign advisory company in preparation for privatization. State policy is aimed at further stabilization and prevention of crises. In 2002, a law was passed on the creation of a stabilization fund, the funds of which will be formed at the expense of resources from the launch of a new oil pipeline.

High oil prices in 2002 and increased tax revenues (over $2.7 billion, up 20% from 2001) improved the financial situation. Gold foreign exchange reserves in 2002 – 1007.9 million US dollars. Inflow of direct foreign investments in 2002 1335 million US dollars. The overall negative balance of payments decreased from $5,707 million in 2000 to $125 million in 2002. External debt service ($15,898 million) accounts for 15.3% of export earnings.

In the beginning. In 1999 the minimum wage was $110, in 2000 it decreased by 3.5%, in 2001 it increased by 11.5%. Savings $4.5 billion. Below the poverty line – 70% of the population (2001 estimate), the poorest 10% account for 0.9% of income, the richest 10% – 41.6% of income (1998).

Dollarization contributed to the increase in imports and had a negative impact on the growth of exports. Export 5025.7 million dollars (2002), incl. crude oil 36.6%, bananas 19.3%, seafood 5.6%, flowers 5.8%, petroleum products 4.4%. Import: 6431.0 million US dollars (2002), incl. consumer goods 28.0%, raw materials and semi-finished products 30.1%, machinery 36.4%, building materials 5.5%. Main partners (%): in terms of export – USA (40.8), EU (15.8), Peru (7.4), Colombia (7.2), Japan (2.0); imports – USA (23.0), Colombia (14.0), EU (13.8), Brazil (6.3), Japan (6.1).

Economy of Ecuador