Ecuador bounces back in 2025 but will it be enough to entice international investors investors?
Ecuador boasts a stable democracy, growing economy and world-class investment opportunities yet risks remain for foreign investors...
After a bruising 2024 marked by economic contraction and energy disruption, Ecuador is showing early signs of recovery. The country’s economy expanded by 3% in the first quarter of 2025, according to the Central Bank of Ecuador (BCE), which now forecasts 2.8% growth for the year. For international investors, the message is clear: Ecuador is back on the radar—but so are its familiar risks.
Speaking at the International Congress on Economics and Banking, BCE General Manager Guillermo Avellán highlighted the turnaround, noting the revival of household consumption and an uptick in exports and investment as key growth drivers. The bank’s newly developed economic activity index suggests consistent growth momentum, with sectors such as agriculture (+17.5%), fishing (+12.1%), and finance (+8.4%) leading the recovery.
These figures are even more notable considering that Ecuador’s economy contracted by 2% in 2024, dragged down by falling government and household spending, power shortages, and weak public investment. The rebound is welcome—but it’s fragile.
Democracy premium
Ecuador’s thriving democracy has added a layer of stability. Daniel Noboa’s election victory on April 13 highlighted one of Ecuador’s most important strengths – a relatively peaceful political culture. Ecuador avoided the levels of intense political violence that gripped countries like Peru, Colombia, Chile and Argentina in second half of the 20th century. And its democracy has grown in strength in the 21st century. There have been chaotic spells – it had six presidents between 1997 and 2007 – but since the departure of president Rafael Correa in 2017, the country has changed presidents in a peaceful, democratic manner.
But while Ecuador's democracy has held firm, the state's capacity remains weak. Underinvestment in infrastructure, healthcare, and education has left Noboa with a big list of challenges. A violent crime wave—fuelled by transnational drug gangs—has transformed the once-tranquil country into one of Latin America’s most dangerous.
Noboa faces a complex balancing act - jumpstart economic growth, reduce insecurity, and do so with limited fiscal headroom.
In 2024, Ecuador achieved a rare feat in the region: a fiscal surplus. But that discipline came at a cost. Public sector austerity has left social services stretched and infrastructure projects delayed. With external debt repayments set to rise to $1.5–2 billion annually by 2026, Noboa’s administration has little room for large-scale stimulus.
Foreign investors to the rescue?
Noboa – indeed Ecuador – needs foreign investors to commit long-term capital in projects that create jobs and stimulate economic growth. That then generates the tax revenue needed to fortify the state and allow it to combat crime and improve public services.
For UK investors willing to take the risk, there are plenty of world-class investment opportunities in Ecuador. It is a top-five global exporter, both in terms of quantity and quality, of cacao, shrimp, banana, tuna and cut flowers. Situated next to Peru, the world’s third-largest copper producer, many geologists believe that under-explored Ecuador could have the world’s fifth largest copper reserves, while it also has significant deposits of silver and gold.
In mid-June, Noboa authorized the reopening of Ecuador’s mining cadastre—closed since 2018 after corruption and permit irregularities. The phased launch, starting with non-metallic concessions and small-scale metal mining this September, intends to improve transparency, combat illegal gold extraction—now active in 18 of 24 provinces—and provide licensed investment opportunities.
Yet that move was countered by the introduction of a Mining Inspection Fee (Tasa de Fiscalización Minera). In theory the tax will support environmental oversight of mining projects.
Junior explorers say rates of up to $11.50/ha could exceed their entire exploration budgets—possibly halting the critical pipeline of new projects. Indeed the fee is being challenged in Ecuador’s Constitutional Court by the country’s Chamber of Mines.
But there is more to Ecuador than just mining. The country’s incredible biodiversity – there are more different types of tree species in one hectare of Yasuní jungle than in in the entire combined landmass of Canada and the US – creates opportunities for tourism and green investment. While the electricity crisis, which stems from an over-reliance on hydroelectricity in a country that can be prone to droughts, means there is a massive incentive to build wind, solar or even conventional power plants.
Ecuador presents a mix of opportunities and risks for investors. Yet the fact that its economy is bouncing back from a tough 2024, will put it back on the spotlight.