Ecuador: Selected Issues

This Selected Issues paper focuses on boosting sustainable growth in Ecuador. Ecuador’s economic growth has slowed over time. This paper assesses Ecuador’s growth performance and discusses strategies to revitalize it. Ecuador’s economic growth has slowed markedly since the 1990s, amid low investment, slowing employment growth, and anemic growth in total factor productivity (TFP) in the last decade. The security crisis poses additional risks to the growth outlook. To address these challenges, a comprehensive reform strategy should focus on: (1) improving the security situation and curbing the outflow of workers, including through job-rich opportunities for youth; (2) revitalizing the business environment to attract investments; and (3) implementing reforms that can boost TFP. A range of other important reforms could also help boost potential gross domestic product. These include lifting regulatory constraints in product and service markets, as well as addressing efficiency and governance problems within state-owned enterprises. In addition, it is key to ensure sufficient and reliant access to energy as well as diversifying the economy for the climate transition.