Global economies have seen uncertain and uneven recoveries through 2021, and the story is no different for Ecuador. The election of a center-right president promises to bolster Ecuador’s business environment and economic recovery; however pandemic restrictions, an uneven labor market recovery, and weak underlying growth fundamentals continue to weigh down Ecuador’s economy, exacerbated by fiscal limitations that leave little room for large-scale stimulus spending in 2021.  

Despite a slow start to vaccination in H1 2021, the government of Guillermo Lasso is committed to an ambitious goal of vaccinating roughly half the population in its first 100 days. Vaccination levels have already accelerated greatly in July, with approximately 15% of the population receiving a first dose of the vaccine in the space of just two weeks. If this pace is sustained, Ecuador stands to see an accelerated timeline for the sustained reopening of the economy in 2021. Nonetheless, notable downside risks from fiscal reforms, a divided legislature, and potential social unrest will continue to loom over the recovery.

What does this mean for your business? Ecuador’s slow start to 2021 sets the pace for the remainder of its recovery. While growth will look different across sectors, businesses across the board can expect continued uneven performance and uncertainty amid Ecuador’s gradual recovery. Our team has the tools you need to ensure sustained growth through the pandemic recovery. Here are three key trends in the market for you to monitor to keep you ahead of the competition.

  • The surprise election of pro-business candidate Guillermo Lasso in April’s presidential election, accelerating vaccinations, and a less severe-than-expected economic decline in 2020 push our forecasts for Ecuador’s recovery timeline upward, expecting the economy to return to pre-pandemic levels in 2023.
  • The headline numbers for Ecuador’s labor market suggest that it has nearly fully recovered, with unemployment down to 5.6% in April along with largely normalized informal/formal employment levels. However, underemployment is still high and full-time/adequate employment is low compared to pre-pandemic. This will slow the recovery in consumer spending and B2C opportunities.
  • Overall, firms should prepare for steadily improving B2B and B2C environments, tempered by pandemic scarring and political uncertainty. Monitor the planned tax and labor reforms, as well as the outcome of new negotiations with the IMF over fiscal adjustment measures.

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