Ecuador

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

Ecuador

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

BMI View:

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 37.8 out of 100 in our Trade and Investment Risk Index, putting it in 37th place in the Latin America region, just behind Argentina (39.1) and...

Ecuador Crime & Security

BMI View:

BMI View: Ecuador presents many challenges to businesses owing to its crime and security situation. Spillover from the country's neighbours increases insecurity in the north of the country and allows organised crime syndicates to take root. This is aided by police corruption and collusion, leaving the country vulnerable to fraud, money laundering and smuggling. These factors increase costs to businesses by necessitating the implementation of private security measures. As a result, Ecuador scores a low 34.7 out of 100 for its Crime and Security Risk, placing it in 35th position out of 42 countries in the Latin America and...

Ecuador Labour Market

BMI View:

BMI View: Overall, Ecuador boasts a large labour force and a growing pool of skilled workers, providing significant recruitment opportunities for low-skilled, labour-intensive industries. Reforms have improved access to schools and the quality of education, as well as cut unemployment and underemployment. However, there is a lack of more advanced skills in the labour market due to persistent issues with school enrolment rates, while onerous labour legislation and high employment costs will further deter businesses from locating in Ecuador. As a result,...

Ecuador Logistics

BMI View:

BMI View : Ecuador's strong trade flows and large market size make the country an attractive destination for investors. Companies breaking into or expanding in the country will, however, face logistics risks. The uneven extent and quality of the country's transport network increases lead times, which, coupled with bureaucratic hurdles, raises operating costs. Overall, the country scores an above average 55.4 out of 100 in the BMI Logistics Risks Index, placing it in a competitive place regionally...

Ecuador Trade & Investment

BMI View:

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 (5)

Autos

Ecuador Autos

BMI View:

BMI View: Import controls and another year of economic recession will provide the main drags on vehicle sales. As such, we forecast a forecast contraction of 28.8% in vehicle sales in 2016, reaching 57,918 units.

Passenger Car and Light Commercial Vehicle Sales
(2014-2020)
f = BMI forecast. Source: AEADE, BMI

Key Views
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Infrastructure

Ecuador Infrastructure

BMI View:

BMI View: Ecuador's infrastructure development will slow considerably over the next five years as the country faces the widest budget deficit in decades, mainly due to the sustained low oil price. The government's push for Public Private Partnerships (PPPs) will be critical to maintaining growth in the construction industry, particularly in the transport sector where there is a sizeable project pipeline.

Forecasts and Latest Updates

After a considerable slowdown in Ecuador's construction industry growth in 2015, we expect growth to remain moderate over the coming years. We forecast an average real growth of 3.7% in real terms between 2016 and 2020. This is low compared to the 9.0% average...

Oil & Gas

Ecuador Oil & Gas

BMI View:

BMI View: Ecuador's upstream sector will suffer from the broader industry downturn through the remainder of the decade, but its downstream sector is likely to shift to net exporter status by 2018. We hold a modest growth outlook for the country as a result of increasingly limited upstream prospects and continued uncertainty regarding the future of Ecuador's largest untapped oil field.

Headline Forecasts (Ecuador 2014-2020)
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Pharmaceuticals & Healthcare

Ecuador Pharmaceuticals & Healthcare

BMI View:

BMI View: Chinese investment in Ecuador's pharmaceutical and healthcare sector will continue to be pertinent for the country in order for it to meet the increasing demand of medicines within its public healthcare sector. Foreign generic drugmakers will, however, face significant competition from local market leaders.

Headline Expenditure Projections

Pharmaceuticals: USD1.6bn in 2015 to USD1.7bn in 2015; +5.7% in US dollar terms. Forecast has been downgraded from Q216.

Healthcare: USD9.7bn in 2015 to USD10.3bn in 2016; +5.7% in US dollar terms. Forecast has been increased...

Telecommunications

Ecuador Telecommunications

BMI View:

Regulatory changes at the beginning of 2015 continue to advance the more controversial aspects of operating in Ecuador's telecoms market. In the past, the government has shown a tendency to protect CNT from private competition and the new regulation instituted during 2015 will not change this trend, with additional taxation and high cost of 4G spectrum licences. The launch of 4G by Claro and Movistar will bring competition to this segment where CNT has operated exclusively since 2013. Broadband will be one of the fastest growing sectors over our forecast period, backed by CNT investment in fibre and coverage expansion beyond major towns and cities.

Although 4G services were launched by incumbent Corporacion 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...

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