(C) Center for Economic & Policy Research
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Ecuador: A Decade of Progress, Undone [1]
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Date: 2023-08
Executive Summary
Ahead of snap elections scheduled for August 20, 2023, this issue brief looks at some of the results of Ecuador’s economic reforms, policy, and institutional changes over the past 15 years.
After a decade of unprecedented political and economic stability, the last six-plus years in Ecuador have been characterized by declining growth, increasing poverty, one of the highest per capita death rates from the COVID pandemic in the world, spiraling violence and insecurity, and renewed political instability.
From 2007 to 2017, Ecuador’s government, led by President Rafael Correa, undertook significant economic and institutional reforms. Social spending doubled; poverty fell by over 41 percent; and average annual per capita GDP grew by 1.6 percent, more than double the rate of the previous 25 years.
Beginning in mid-2017 with the election of Lenín Moreno, the government drastically shifted its economic policies and returned to the International Monetary Fund (IMF). Government-imposed austerity measures pushed the economy into recession prior to the onset of the COVID pandemic. In just two years, poverty and inequality had reached their highest levels in more than a decade.
Though Ecuador experienced a mild bounce back from its pandemic lows under the presidency of Guillermo Lasso, the country has had the worst-performing economy in South America, with per capita GDP still 5 percent below 2019 levels. Continued austerity, mandated as part of an IMF reform program, has also taken a heavy toll. The economy is currently on the edge of recession after negative growth in the first quarter of 2023, poverty has started to increase again, and Ecuador will be paying hundreds of millions of dollars each year to service IMF debt.
Within this context, violence and insecurity have skyrocketed. The homicide rate, after declining from 18 per 100,000 people in 2006 to 5.8 in 2016, and remaining constant for multiple years, has increased drastically to 25.9 in 2022. Through the first six months of 2023, the number of violent deaths increased by 55 percent over the same period in 2022. The Lasso administration has declared multiple states of emergency in response to the increasing violence, which has included historic and appalling levels of prison violence, including a number of massacres. Political violence has also erupted, including the assassination of presidential candidate Fernando Villavicencio, and of Agustín Intriago of Manta, Ecuador’s fourth-largest city, in the last few weeks.
Since his decision in May to dissolve the legislature, which led to the upcoming snap elections, President Lasso has been able to rule by decree and has rolled back even more of the policies that go back to the 2007–2017 period. In a context of slower global growth and increasing poverty, the effects of Moreno and Lasso’s dismantling of prior institutional reforms and economic policies are becoming harder to ignore.
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[1] Url:
https://cepr.net/report/ecuador-a-decade-of-progress-undone/
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