The Ecuador economic system gradually recovered after a national lockdown in the second quarter of 2020 but has had to implement local restrictions resulting from the spread of COVID-19. Cases rose sharply in January 2021, forcing local authorities to reimplement restrictions. The country began to vaccinate priority groups last month with the Pfizer vaccine, but is still awaiting larger shipments. At this time, Ecuador has secured sufficient COVID-19 vaccine dosages to immunize 42.5% of its population.
Ecuador’s Unique Challenges
Ecuador faced the perfect economic storm amid COVID-19 and the oil price crash. Their oil-dependent economy struggled amid significantly weak prices throughout 2020, but a modest recovery is expected in 2021. The government has had to continue aggressively cutting spending and tapping into debt amid persistent fiscal shortfalls now pushed to new extremes by COVID-19. However, the country managed to reach a major debt restructuring deal creating some breathing room.
Ecuador Economic System Forecasts and Scenarios
The current crisis will inflict major structural damage limiting Ecuador’s growth potential for years to come. Reasons for lower structural growth include bankruptcies in 2020 that led to lower overall investment, slow employment recovery and lower confidence levels. The base case projects a 2025 recovery with no return to pre-COVID levels of aggregate trade, growth, and commodity demand until 2022.
Healthcare Market Impact
The next government will need to set new priorities for Ecuador’s healthcare system recovery. No one candidate has a robust plan, but the next leader will undoubtedly be faced with making stark trade-offs. The biggest question regarding the next 2021 budget (post-election) is to what extent the health and education budgets will be adjusted downward given the decline in overall economic activity (the constitution requires healthcare spending to increase .5 percentage points above GDP growth). With both candidates proposing highly differentiated courses of actions, our analysts have identified some of their key platform differences.
Candidates’ Proposals Highlight Different Areas of Focus:
- Outsourcing of health management to private sector
- Register of patients with catastrophic and chronic diseases
- Create free trade zones for healthcare to increase investment
- Guarantee access for immigrants to public health system
- Unify health system, placing private providers to provide public services
- Provide free social insurance for all
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