Escape Artist
  • Features
    • Interviews
    • News
    • Field Notes
    • Trending
  • Your Escape Plan
    • Finance
    • Real Estate
    • Second Citizenship
    • Events
    • Shop
  • Destinations
    • Europe
      • France
      • Germany
      • Italy
      • Portugal
      • Scandinavia
      • Spain
      • United Kingdom
      • Rest of Europe
    • Central America
      • Belize
      • Costa Rica
      • El Salvador
      • Guatemala
      • Honduras
      • Nicaragua
      • Panama
    • Others
      • Africa
      • Asia
      • Australia
      • North America
      • South America
  • Travel Tips
    • Know Before You Go
    • Packing List
    • Food + Culture
    • Health + Wellness
  • Subscribe
Escape Artist
  • Features
    • Interviews
    • News
    • Field Notes
    • Trending
  • Your Escape Plan
    • Finance
    • Real Estate
    • Second Citizenship
    • Events
    • Shop
  • Destinations
    • Europe
      • France
      • Germany
      • Italy
      • Portugal
      • Scandinavia
      • Spain
      • United Kingdom
      • Rest of Europe
    • Central America
      • Belize
      • Costa Rica
      • El Salvador
      • Guatemala
      • Honduras
      • Nicaragua
      • Panama
    • Others
      • Africa
      • Asia
      • Australia
      • North America
      • South America
  • Travel Tips
    • Know Before You Go
    • Packing List
    • Food + Culture
    • Health + Wellness
  • Subscribe
👤

THE NUMBER ONE SOURCE FOR EXPATS, DIGITAL NOMADS, AND DREAMERS.

This field is for validation purposes and should be left unchanged.
  • Your Escape Plan

Another Ecuador Economic Upgrade

  • BY EA Editors
  • January 24, 2012
Total
0
Shares
0
0
0

After purposely holding this report back for about a month, to await for the usual “street chatter” to die down a bit, it is time for some more reflective consideration on the state of the Ecuadorean economy. In mid-October, the respected Fitch Rating Agency, once again upgraded the Ecuador economic, long-term credit rating to B, from a previous B- rating. While still considerably below “investment grade” status, it is not only a respectable rating for an emerging market, but is a far cry improvement from the economic debacle of just 12 years ago. Why is it, then, that more politicized fountains of data are somewhat dismissing this dynamic economic growth and credit enhancement in Ecuador?

Fitch raised the credit rating citing faster economic growth and increasing financial stability. Pretty straightforward. Not a great deal of room for ambiguity. Fitch also quietly did something else, which it had not done previously for Ecuador. Citing the long-term outlook rating, Fitch deemed Ecuador to be stable. Meaning that no only were Ecuador’s current prospects improving, but that under the Correa Administration economic reforms, the improvements were considered sustainable, leading to a long-term prognostication of stability.

Respectfully, if the same rapid economic progress had been made in most any other country in the world, over the same short period of time, I would imagine most media outlets and official global government sources would be heralding this accomplishment as a “Miracle Economy”. Why not Ecuador?

 

Well, before we explore that, let’s dig deeper into the current Fitch assessment. The venerable firm assessed Ecuador’s new credit rating with complimentary assertions about the continued healthy growth performance on a national basis, underpinned by sound principles of monetary and financial stability and a steady easing of external and fiscal financing risk factors. Furthermore, in what could Fitch’s most profound and impactful observation, they note that Ecuador is benefitting from favourable oil prices and the ready availability of funding from China and other multilateral lenders. Embrace that last comment, firmly in the back of your mind.

While certainly the windfall profits from Ecuador’s participation in OPEC and the Chinese funding have propelled its current economic growth, it can’t be denied that its immediate past history and, quite ironically, perhaps the central catalyst to its economic spark, has weighed Ecuador down in the Western press. In the period between 2008-2009, Ecuador defaulted on approximately $3.2 billion USD of international bonds, by a USA-led coalition of lenders. Whatever personal moral or economic weight one chooses to lay at the feet of such a dramatic and drastic decision, President Correa was clear that a great deal of the World Bank and IMF funding was geared towards providing an initial economic boost, followed by a life-long dependency on ever increasing sums of debt, ultimately weighing down the very economic progress the loans initially sparked. In essence, a quintessential case of the cure, being worse than the illness. Correa bit the bullet and basically conceded to having Ecuador go it alone.

 

The immediate result from the international financing community and the mainstream media was predictable. Ecuador would endure an economic collapse and find no willing lenders for a long period to come. Here we are, 12 years later, harken back to the previous observations by Fitch’s most recent upgrade – “…the ready availability of funding from China and multilateral lenders…” Reality trumps the best of predictions and Correa’s gamble paid off dramatically.

However, one does admittedly wonder if such a gambit would have worked, if orchestrated by a lesser mind than Correa. A USA trained economist and a decisive personality, Correa had all the required skill sets at hand to ensure success, with the ever increasing demand for oil well underpinning Ecuador’s chief export and assuring the country of “economic sustenance”. A nation less well positioned with nation less well-positioned with natural resources, or led by a less charismatic and well-versed leader, may have found itself on the short-end of such a risky gamble.

Still, while not negating the previous statement, it is the reality of the outcome, not the long-negated “what if”, upon which the global media should focus, when assessing the economic success story of Ecuador. Yet, report after report suggests the “questionable” nature of Ecuador’s economic recovery and the limited [Western?] direct foreign investment flows. Reality defies such observations and as any good investor knows, when the facts and perception are misaligned, it is when the best value play opportunities arise. I have gone from considering Ecuador one of the three best risk-adjusted value plays today in my field of specialization, real estate, to perhaps one of the best value play stories I have witnessed during 30 years in the industry.

If the latter seems like hyperbole, consider this. Even Fitch’s renewed B rating, places Ecuador only at levels equivalent with nations such as Lebanon. I challenge anyone to place boots on the ground in Lebanon and boots on the ground in Ecuador and not notice a considerable difference. Reality…perception…opportunity. The rating agencies, no matter how venerable, are notorious for trailing economic reality. Too slow to raise ratings on the upside and too slow to cut ratings on the downside. Reality places Ecuador at economic ratings at least two rating levels higher and rising rapidly. In value investing, the money is made while the blaze is still perceived to be burning, not long after the smouldering smoke reminds the world that the fire has long been extinguished. Value players…it is time to take a serious look at Ecuador. Boots on the ground is the way to separate fact, from myth.

 

 

Total
0
Shares
Share 0
Tweet 0
Pin it 0
Previous Article
  • United Kingdom

Running Towards or Running From

  • BY staffwriter
  • January 24, 2011
View Post
Next Article
  • Your Escape Plan

Medellin is a winner !

  • BY David Steckenreiter
  • April 22, 2012
View Post
You May Also Like
Belize Language Reality: Multilingual Life Beyond Official English
View Post
  • Belize
Belize Language Reality: Multilingual Life Beyond Official English
  • BY EA Editorial Staff
  • October 11, 2025
Cost of Living in Portugal 2025: What It Really Takes to Live Well
View Post
  • Portugal
Cost of Living in Portugal 2025: What It Really Takes to Live Well
  • BY EA Editorial Staff
  • October 11, 2025
Cost of Living in New Zealand: 2025 Complete Guide
View Post
  • New Zealand
Cost of Living in New Zealand: 2025 Complete Guide
  • BY EA Editorial Staff
  • October 10, 2025
Costa Rica Cost of Living Guide: Prices, Budgets, and Tips
View Post
  • Costa Rica
Costa Rica Cost of Living Guide: Prices, Budgets, and Tips
  • BY EA Editorial Staff
  • October 10, 2025
Top 10 Best Places to Live in Mexico – Discover Your Ideal City
View Post
  • Mexico
Top 10 Best Places to Live in Mexico – Discover Your Ideal City
  • BY EA Editorial Staff
  • October 8, 2025
Buying a Property abroad
View Post
  • Your Escape Plan
Why More Investors Are Buying Homes Offshore
  • BY EA Editorial Staff
  • October 8, 2025
Best Places to Live in Spain: A City-by-City Guide for 2025
View Post
  • Spain
Best Places to Live in Spain: A City-by-City Guide for 2025
  • BY EA Editorial Staff
  • October 8, 2025
Hungarian Citizenship by Descent Journey from Amercia
View Post
  • Second Citizenship
Our Journey from America to Hungarian Citizenship
  • BY Ethan Cohen & Learn Hungarian Anywhere
  • October 1, 2025
Trending Posts
  • Hungarian Citizenship by Descent Journey from Amercia 1
    • Second Citizenship
    Our Journey from America to Hungarian Citizenship
    • October 1, 2025
  • Buying a Property abroad 2
    • Your Escape Plan
    Why More Investors Are Buying Homes Offshore
    • October 8, 2025
  • Abkhazia jewel of Soviet summer escapes 3
    • Field Notes
    Secrets of the Soviet Riviera
    • October 3, 2025
  • Expat Child Syndrome 4
    • Wellness
    The Untold Story of Expat Kids
    • October 6, 2025
  • Summer in Lapland: Lapland’s wild landscapes glow under the endless Arctic sun 5
    • Field Notes
    Before the Snow Falls in Lapland
    • September 29, 2025
Know Before You Go
  • Belize Language Reality: Multilingual Life Beyond Official English 1
    • Belize
    Belize Language Reality: Multilingual Life Beyond Official English
    • October 11, 2025
  • Cost of Living in Portugal 2025: What It Really Takes to Live Well 2
    • Portugal
    Cost of Living in Portugal 2025: What It Really Takes to Live Well
    • October 11, 2025
  • Cost of Living in New Zealand: 2025 Complete Guide 3
    • New Zealand
    Cost of Living in New Zealand: 2025 Complete Guide
    • October 10, 2025
  • Costa Rica Cost of Living Guide: Prices, Budgets, and Tips 4
    • Costa Rica
    Costa Rica Cost of Living Guide: Prices, Budgets, and Tips
    • October 10, 2025
  • Living in Paris: Digital Nomad Guide 5
    • Digital Nomadism
    A Digital Nomad’s Guide to Living Like a Local in Paris
    • October 10, 2025
Learn More
  • About us
  • Contact
  • Advertise
  • Subscribe
Why Subscribe

The newly imagined Escape Artist brings you fresh content with a global focus, and sharp, up-to-the-minute coverage of the joys, challenges, and opportunities of life abroad.

For a limited time, we’re offering a special discount on all subscription deals, so be sure to lock-in these incredible savings and start receiving top-notch travel and expat content today!

Sign up for the EA Newsletter

Get important news delivered directly to your inbox and stay connected!

This field is for validation purposes and should be left unchanged.
Escape Artist
  • Terms & Conditions
  • Privacy Policy
  • Cookies Policy
  • Disclaimer

Input your search keywords and press Enter.

Newsletter Subscription
Our Spring Sale Has Started

You can see how this popup was set up in our step-by-step guide: https://wppopupmaker.com/guides/auto-opening-announcement-popups/