Ecuador’s Economy, Currency
Ecuador's economy is mainly based on mining, agriculture and fishing. The mining and exporting of oil have played a dominant role in the country's economy since the early 1970's. Recent years have seen Ecuador's economy depend more and more on the export of cocoa and bananas, of which Ecuador is the world's largest exporter and has been for several decades.
Ecuador has substantial petroleum resources, which accounted for 40% of the country’s export income and one-fourth of central government budget revenues in recent years. As a result fluctuations in world market prices can have a substantial domestic impact.
In the late 1990s Ecuador experienced its worst economic disaster. Not only did the country have to contend with natural disasters, but a sharp decline in world petroleum prices drove Ecuador’s economy into free fall in 1999. Real GDP contracted by more than 6%, with the shortage worsening significantly. The banking system also collapsed and Ecuador defaulted on its external debt later that year. The currency decreased in value by some 70% in 1999 and, on the edge of hyperinflation, the MAHAUD government announced it would dollarize the economy. However a coup ousted MAHAUD from office in January 2000 and, after a short-lived junta failed to garner military support, Vice President Gustavo NOBOA took over the presidency.
In March 2000, Congress accepted a series of structural modifications that also provided the framework for the adoption of the US dollar as legal tender. Dollarization stabilized the economy and growth returned to its pre-crisis levels in the years that followed. Under the administration of Lucio GUTIERREZ – January 2003 to April 2005 – Ecuador gained benefits from higher world petroleum prices. Unfortunately the government has made little progress on economic reforms, which are necessary to reduce Ecuador’s vulnerability to petroleum price swings and financial crises.
Until the 1950s Ecuador had few industries. Those that did exist were engaged mainly in processing agricultural products and the manufacture of textiles, leather products and some consumer goods. The manufacture of straw hats was the main export industry.
Industry has been developing since the late 1950s and especially since the mid-1970s. In addition to much wider activities in processing agricultural, marine and forest products, there are modern textile, chemical, petrochemical, electronic, steel, shipbuilding and building-material industries. Guayaquil and its environments is the main industrial center, with Quito being the second most importance. Nearly three-quarters of Ecuador’s industry is concentrated in this network of urban communities.
Small quantities of gold, silver, copper and zinc are produced. The country is known to have deposits of uranium, iron ore, lead and coal.
Last updated: December 29, 2018