In Q1 2022, tax revenue surpassed 2019 levels, bolstering fiscal stability in Ecuador

An embattled pro-business president struggles to appease indigenous groups

Widespread social unrest broke out in Ecuador in mid-June, as activist groups protest pro-business President Guillermo Lasso and call for expanded public spending. The unrest has lasted for over two weeks, with substantial disruptions to economic activity in the country. Initial negotiation efforts, as well as concessions by Lasso, have failed to end the unrest thus far. A recent vote by the opposition-controlled National Assembly to impeach Lasso also failed to gain requisite support.

Clients should prepare for an extended period of unrest, with disruptions to economic activity from roadblocks and property destruction. B2B clients should also plan for a lengthy period of dampened demand, as heightened political risks and uncertainty will outlast the current wave of social unrest. In addition, clients in the extractive industries should expect heightened disruptions, and oil and mining activity remain priority targets for indigenous protesters.


Since June 14, Ecuador has been hit by targeted and highly disruptive social unrest, led primarily by indigenous groups. The government estimates that, over 12 days, the protests disrupted US$ 135 million in economic activity, with US$ 40 million in disruptions to oil production alone.

In an effort to calm protests, Lasso recently lowered gasoline prices from US$ 2.45 to US$ 1.80. However, protest leaders demand further actions, including a moratorium on formal debt repayment and an end to mining activity on indigenous lands.

While inflation is rising in Ecuador, dollarization has kept it much lower than in other countries in South America, as it remained below 3.4% YOY in April. Nonetheless, a slow recovery in jobs and wages complicates the situation for households and undermines social stability. Additionally, with an oppositional National Assembly, President Lasso has struggled to implement his pro-business reform agenda since being elected in 2021. This has contributed to a steep decline in his approval ratings over the past year, leaving him politically vulnerable.

Our View

Ecuador’s public finances have seen a strong rebound in 2022, thanks to elevated oil revenue and the implementation of a tax reform. This gives the Lasso government some limited space to expand spending in response to protester demands. However, while the public’s frustrations with inflation and a slow economic recovery underlie the unrest in Ecuador, there is an overarching political power struggle that is motivating the protests. As a result, concessions by the government and increased public spending may not be sufficient to end the unrest.

Even after the unrest subsides, President Lasso’s reform agenda is unlikely to see further progress amid legislative gridlock and political polarization, lowering the potential upside from pro-business reforms in the country.

At FrontierView, our mission is to help our clients grow and win in their most important markets. We are excited to share that FiscalNote, a leading technology provider of global policy and market intelligence has acquired FrontierView. We will continue to cover issues and topics driving growth in your business, while fully leveraging FiscalNote’s portfolio within the global risk, ESG, and geopolitical advisory product suite.

Subscribe to our weekly newsletter The Lens published by our Global Economics and Scenarios team which highlights high-impact developments and trends for business professionals. For full access to our offerings, start your free trial today and download our complimentary mobile app, available on iOS and Android.