Ecuador

Ecuador’s economy is rebounding in 2026 after a sharp contraction in 2024, driven by severe power outages, lower oil output and insecurity. After a moderate recovery in 2025, GDP growth is forecast to hover just above +2% for 2026-2027, supported by improved political stability and legislative coordination but still weighed down by structural rigidities and a multi-speed economy. Inflation remains subdued, forecast at 1.5% for 2026, thanks to dollarization, but purchasing power is still low compared to regional peers. Domestic consumption is buoyed by remittances, which account for over 5% of GDP. However, the economy remains vulnerable to external shocks, especially commodity price fluctuations and climate events. Hydropower disruptions due to droughts and climate-related phenomena continue to pose risks to business continuity and growth, while the closure of major oil fields and periodic energy shortages add further uncertainty to the cyclical outlook. Agribusiness sectors such as cocoa, bananas and shrimp are vital to Ecuador’s economy, contributing to around half of export revenues. These sectors benefit from strong global demand, particularly from Asia and Europe, but face cyclical risks from price volatility, logistical hurdles and trade barriers.

Ecuador’s business environment is challenged by rigid labor regulations, barriers to private sector development and pervasive informality. Corruption, opaque public procurement and state interventionism undermine competitiveness and investor confidence. The country scores below average in structural readiness and prevention indicators, with frequent disruptions from extreme weather, seismic activity and energy shortages. While sectors like agribusiness, mining and tourism offer growth potential, they remain exposed to environmental shocks, social unrest and regulatory uncertainty. The government is prioritizing reforms to improve the insolvency framework, promote competition and attract private investment, but progress is slow. Women and marginalized groups face significant disadvantages in employment, and poverty rates remain high, with one in four Ecuadorians living below the national poverty line.