Grupo Spurrier is the leading company in the provision of strategic information on economic and political issues regarding Ecuador, which we monitor through Weekly Analysis and Análisis Semanal. We specialize in economic research, competition advice, market research, business plans, and workshops in economic scenarios and regulatory changes.
The trend has changed. The restrictive phase of economic liquidity, which began in June 2022 and lasted for two years, has ended. Liquidity has been accelerating since July 2024. What happened? First, there has been a significant trade surplus, totaling $6.41B over the 12 months ending in November 2024. A second major source of incremental liquidity is the net external financing received by the government. and a third was remittances. Will these forces persist in 2025? Since August 2024, interest rates have been declining. Bank deposits have risen sharply, but credit has not kept pace due to weak credit demand. How will interest rates and credit evolve in 2025? Why has banking profitability declined? Could new contributions and taxes targeting the banking sector be expected? What challenges does the new Superintendent of Banks face? What will be the impact of the end of electoral uncertainty? Will country risk continuing to decline?
The latest polls from the four main polling firms agree that Noboa is the favorite to come out on top in Sunday's ballot, and the average of their most recent surveys suggests that Noboa could be 10 points ahead of L. Gonzalez and win in the first round. A quick end to the electoral season would allow the government and the country to move past the waiting period since Lasso triggered cross death and focus instead on a strategy to break free from this decade of stagnation. The year ends with strong fiscal health, banking liquidity, and a significant external sector surplus. But have jobs recovered? Will blackouts return? How are sales performing? Jobs? Interest rates? Bank credit? How are exports evolving? In this issue we review the performance of the economy based on indicators available in late January. WA2024#50 contains the revision with indicators available in mid-December.
There are 16 presidential tickets registered for this electoral contest, but two dominate the vote: Daniel Noboa and Luisa González. Noboa promotes a social democratic or center-left stance that assigns the State an active role in promoting social justice. González clearly aligns with a progressive left ideology, focusing on redistributive justice and strengthening the State as a key factor in the economy. What do these candidates' government plans have in common? What are the differences? What are their main proposals? More or fewer taxes? Monetary issuance or adherence to dollarization? Regulatory simplification? Autarky or openness to international trade? Financial openness? Labor rigidity or flexibility? Hostility or support for private enterprise? Populism or institutional respect? State or private investment in electricity? State or private investment in oil? Social security adjustments? Security policy?
BCE published the 2024Q3 National Accounts and review downwards the Q1 and Q2 accounts. As a result, In the first three quarters the economy contracted -2.2%. Capital formation had a markedly worse results than in previous estimates. An investment bank estimates than in Q4 GDP would have contracted -4%. We are in a recession. How did investment perform? Household consumption? What was the performance of the different industries? What is expected for 2025? What are the expectations for the rest of the decade? What is Ecuador's estimated potential growth rate? How can this potential be improved? What reforms can be expected from a full Daniel Noboa administration? In this issue we review Ecuador's growth potential and its main constraints, in the context of the latest detailed quarterly growth data, corresponding to 2024 Q3. Our latest growth outlook report is WA 2024#39. We haven’t analyzed a third quarter since 2016, in WA 2017#02.
Power outages have worsened the employment situation. By November 2024, 249K jobs (urban and rural) were lost compared to September (when the outages began at the end of the month). Y-o-y, November 2024 recorded 132K fewer jobs. Unemployment is now the second-biggest concern for citizens, according to recent surveys. What measures has the government implemented to curb job destruction? What labor-related bills are being discussed in the Assembly? What solutions are presidential candidates proposing? What is the reality of youth employment? Are the proposed solutions for youth employment effective? What does a declining labor force participation rate mean? What does the recent salary increase entail? Does it align with labor productivity trends? How does Ecuador’s minimum wage compare to other regional economies?
During the first four months of the year, we will decide the course Ecuador will take, at least for the rest of the third decade of the 21st century. There is one path if Luisa wins, and two if Noboa prevails: one where the short-term policies of the past year and a half continue, and another where economic reforms are undertaken to overcome the decade-long stagnation. How will 2024 end? What are the prospects of ending the blackouts? How is the electoral campaign unfolding? What are the economic policy options for the incoming government?