20.05.2026
Ecuador’s economy rebounded in 2025 after a contraction in 2024, supported by stronger exports, investment and private consumption. The recovery was helped by improved energy availability, reduced fiscal risks and progress under the IMF-supported programme, although security challenges and political uncertainty remain major constraints. Growth is expected to moderate to around 2.5% in 2026–2027, reflecting Ecuador’s structural weaknesses, including low productivity, rigid labour regulations, oil dependence and limited fiscal space. Inflation remains low under dollarisation, while fiscal consolidation is expected to gradually improve the budget balance and reduce public debt.
| Indicators | 2025 | 2026 | 2027 |
|---|---|---|---|
| GDP growth (%, yoy) | 3.7 | 2.5 | 2.5 |
| Inflation (%, yoy) | 0.7 | 3.3 | 1.9 |
| Employment rate (% of working-age population, 15+) | 61.3 | 61.3 | 61.3 |
| Fiscal balance (% of GDP) | -2.9 | -0.5 | 0.4 |
| Gross public debt (% of GDP) | 54.3 | 52.5 | 51.7 |
| Current account balance (% of GDP) | 5.1 | 5.4 | 4.4 |
Growth rebounds but remains structurally weak
Ecuador’s real GDP growth recovered to 3.7% in 2025, after a contraction of 2.0% in 2024. The rebound was driven by stronger exports, investment and private consumption, helped by better energy availability and reduced fiscal uncertainty. Non-oil goods exports and remittances also supported the recovery, while import growth remained moderate.
Growth is projected to settle at around 2.5% in 2026 and 2027. Private consumption should be supported by better labour-market conditions and credit expansion, while investment should benefit from reduced political uncertainty and improved fiscal credibility. However, Ecuador’s medium-term growth remains limited by low productivity, labour-market rigidity, security risks, power-sector vulnerabilities and dependence on oil revenues.
Inflation remains low under dollarisation
Inflation stayed very low in 2025, averaging 0.7%. Dollarisation, subdued domestic demand and moderate import-price pressures helped keep inflation contained. Inflation is projected to rise to 3.3% in 2026, mainly reflecting higher global energy prices and pass-through to domestic costs, before easing to 1.9% in 2027.
The inflation outlook remains favourable compared with many regional peers. However, higher fuel, transport and food costs could put pressure on household purchasing power, especially among lower-income groups. Dollarisation provides a strong nominal anchor, but it also limits the role of exchange-rate adjustment in absorbing external shocks.
Fiscal consolidation improves the outlook
The fiscal deficit widened to 2.9% of GDP in 2025, as spending increased and lower oil revenues offset gains from tax collection and earlier fiscal measures, including the higher VAT rate. However, progress under the IMF-supported programme helped restore policy credibility and improve market access.
The fiscal deficit is projected to narrow to 0.5% of GDP in 2026 and shift to a small surplus of 0.4% in 2027. This improvement is expected to be supported by stronger revenues, expenditure restraint and continued fiscal adjustment. Public debt is projected to decline from 54.3% of GDP in 2025 to 51.7% in 2027, although financing needs remain high and debt service pressures will persist.
External position remains strong but oil-sensitive
The current account surplus reached 5.1% of GDP in 2025, supported by strong non-oil exports, remittances and restrained import growth. It is projected to remain sizeable at 5.4% of GDP in 2026 and 4.4% in 2027, although the surplus should narrow gradually as private spending and imports recover.
Ecuador’s external position remains exposed to oil prices, export performance, remittance flows and global demand. Higher oil prices can provide short-term fiscal and external support, but oil dependence also creates vulnerability to price declines and production disruptions. Slower growth in key trading partners, especially the United States and China, would weigh on exports and investment.
Overall outlook
Ecuador’s outlook has improved after the 2024 contraction, but the recovery remains fragile. Growth is expected to stabilise at a modest pace in 2026–2027, while inflation should remain low and fiscal consolidation should reduce debt gradually. The main challenges are security, fiscal discipline, power-sector reliability, low productivity and dependence on oil revenues. Sustained improvement will require structural reforms to support private investment, formal job creation, trade openness, energy resilience and stronger public institutions.
Sources:
World Bank, Ecuador Macro Poverty Outlook, April 2026.
International Monetary Fund, Ecuador: Reviews Under the Extended Fund Facility, 2025–2026.
International Monetary Fund, World Economic Outlook, April 2026.
Central Bank of Ecuador, National Accounts and Balance of Payments Statistics, 2025–2026.
AFD, Ecuador MacroDev Country Note, March 2026.
