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Rafael Correa at Artieda 2011

Rafael Correa


In addition, there are several mechanisms that will allow more calmly cope with the fluctuations of the market but the collapse in the price of oil was not the only bad news received by the Ecuadorian economy in recent months. It is the strong devaluation produced several Latin American currencies represents a blow to its trade balance which will be affected by the loss of competitiveness. It is that 36.6% of Ecuadorian exports are destined to Latin American countries, while 46.5 per cent of Ecuadorian imports come from the countries of Latin America. The fragility of the Ecuadorian economy is reflected in the jump which hit the risk country, which It lies above the 2,950 points and the level of risk is highest country in the region. It is worth remembering that in January 2007, when Rafael Correa assumed as President of Ecuador, country risk amounted to 827 basis points.

By this the risk level is country which, according to the data issued by the Central Bank of Ecuador, the market value of the debt of the Global bonds found in one-third of their nominal value. This strong rise, while responding in part to a preference of investors for safer assets, explains a greater proportion to the policies and statements of Rafael Correa, who said that missing money will not pay debt: where there is a very serious crisis and much falling oil prices, first, I insist, we will review the payment of foreign debt said in a radio interview in the town of Cuenca. Obviously that the market could not stay quiet before such manifestation of sincerity. The situation of the Ecuadorian economy is undoubtedly quite complex. To make matters worse, have to deal with a high level of inflation, which is currently located in 9,97%, that although it does not seem too much, if it is compared with the rate inflation in Venezuela and the real in Argentina, the dollarization of the Ecuadorian economy implies a strong deterioration of their competitiveness with similar pace of growth in prices. But the problem of the Ecuadorian economy is not just the current cyclical problems particularly linked to the oil price, but go beyond and relate to the limitations of its economy and its close productive structure, among other important aspects such as this. Ecuador should move away a little of the bad influences of Chavez and begin working to eliminate rigidities in its economy and thus strengthen it so you don’t have to suffer adverse shocks before as that is currently living. And paradoxically, although both Correa and Chavez are displayed cheerful with the collapse of the developed economies caused by this crisis, I imagine that at the same time they will be waiting for his speedy recovery to achieve recomposition of the value of a barrel of oil, at least to prevent a crisis situation and to be able to think seriously about a change in its economic policy.

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