Ecuador
In-depth country-focused analysis on Ecuador's economic, political and operational risk environment, complemented by detailed sector insight

Our comprehensive assessment of Ecuador's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Ecuador, as well as the latest industry developments that could impact Ecuador's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Ecuador before your competitors.

Ecuador Operational Risk Coverage (9)

Ecuador Operational Risk

Ecuador Crime & Security

Ecuador Labour Market

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BMI View: Overall, Ecuador boasts a large labour force and a growing pool of skilled workers providing significant opportunities, and recent reforms cutting down on unemployment and underemployment. However, onerous regulations, a high degree of unionisation, and a generally unfriendly business environment keep costs high. As a result, Ecuador sits in the middle of pack in Latin America with regards to Labour Market risks.

Ecuador has a Labour Market Risk score of 53.4 out of 100. This puts it in 10 th place in Latin America, between Mexico and Venezuela (which have scores of 54.6 and 52.9 respectively), and 11.2 points behind regional leader Chile.

Availability of Labour risks is relatively muted in Ecuador, due to a substantial labour force and favourable demographics. Indeed, Ecuador has a large pool of unskilled workers to fill a substantial number of jobs in the agricultural and...

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Ecuador Logistics

Ecuador Trade & Investment

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BMI View: Ecuador remains one of the more unattractive countries in the region from a trade and investment perspective. While the market is technically open to investment, a number of regulatory changes since 2007 have acted as a significant deterrent. Combined with high levels of corruption, significant red tape and poor enforcement of intellectual property laws, this has acted to stymie foreign investment. While we have seen the government take modest steps to improve the business environment, and expect a return to capital markets in the coming year, we believe that fundamentally there will be little significant shift in policy, keeping us cautious. We have given Ecuador a score of 37.5 out of 100 in our Trade and Investment Risk Index, putting it in 22nd place in the greater Latin America and Caribbean region, between the Dominican Republic (38.1) and Guatemala (36.4), and well behind the region's top performer, Barbados (61.2).

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Ecuador Industry Coverage (4)

Autos

Ecuador Autos

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The import restrictions that have newly been put into place will have a considerable effect on Ecuador's vehicle sales and production over 2015. BMI is forecasting vehicle sales to fall 23.1% over the year and for vehicle production to decline by 18.0%.

This decline is primarily on the back of Ecuador announcing a series of measures aimed at curbing autos imports in an effort to protect local producers from import price effects of devaluation and the strong depreciations in the currencies of Ecuador's key trade partners in the Andean and Latin American regions.

In 2013, the country's auto sector was weighed down by a weakness across the economy, specifically poor private consumption growth. Vehicle output dropped 16.2% and domestic sales declined 6.3%. 2014 saw the reversal of this downward trend, where an upturn across the economy spurred commercial vehicle and passenger car sales. However,...

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Infrastructure

Ecuador Infrastructure

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BMI View: We currently forecast 6% real growth for Ecuador's construction industry in 2015. This is considerably lower than the 10% average of the last five years as we expect falling oil prices to considerably weaken infrastructure growth.

Key Trends And Developments

  • While a number of factors have boosted prospects for Ecuador's construction industry over the medium term, weaknesses in the country's business environment will continue to present risks and cap growth. Chief among these will be financing.

  • We believe Ecuador's infrastructure industry growth is highly unsustainable as it relies heavily on revenues from oil exports.

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Oil & Gas

Ecuador Oil & Gas

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BMI View: Ecuador's upstream sector will experience very modest growth in the remainder of the decade, but its downstream sector could see a transformation from being a net importer of refined products to an exporter of refined products by 2018. Overall, BMI holds a bearish outlook for the country as a result of limited upstream prospects amid a lower oil price environment, coupled with continued uncertainty regarding the future of Ecuador's largest untapped oil field.

Headline Forecasts (Ecuador 2013-2019)
2013 2014e ...

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Telecommunications

Ecuador Telecommunications

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Although 4G services were launched by incumbent Corporación Nacional de Telecomunicaciones in late 2013, we see little prospect of the service taking off before more spectrum is awarded to other players. The move to favour state-owned CNT does not bode well for its internationally-owned rivals Claro and Movistar, the operators that have the greatest potential for rolling out 4G services in the country. BMI believes that the country's politics is playing too large a role in telecoms policy, which will have long-term negative effects on the market's growth. Ecuador has passed 100% penetration and sees a notable slowdown in growth potential. Opportunities are in 3G and content, which should entice consumers to spend more.

Key Data

  • Mobile subscriptions will grow to 19mn by 2018, up...

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