Feature: Pandemic-hit Ecuador faces uncertain economic future, say experts

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QUITO, May 26 (Xinhua) -- Ecuador faces an uncertain economic future marked by growing unemployment and slow recovery in the wake of the novel coronavirus pandemic, analysts agree.

Ecuador, which had seen a total of 37,355 cases of infection and 3,203 deaths from the disease by Monday, is one of the hardest hit countries in Latin America, which the World Health Organization (WHO) has warned is the "new epicenter" of COVID-19.

In an interview with Xinhua, the former economy minister, Fausto Ortiz, said the country is in a "very complicated" situation that is likely to see the economy shrink between 6 percent and 10 percent this year, far more than the official government estimate of 4 percent.

"What might happen following this great depression that we will have in 2020 is that it produces a rebound effect in the economy," said Ortiz.

The South American country started the year with an accumulated fiscal deficit of 4 billion U.S. dollars that was then compounded by the lockdown and ensuing economic losses.

In addition, the country's foreign debt has ballooned to 65 billion U.S. dollars and the price of oil, its main export product, tumbled from 60 U.S. dollars a barrel at the beginning of the year to 24 U.S. dollars per barrel.

"Ecuador is going through a critical situation. Before the pandemic, it was already in an economic depression, and the pandemic is making that depression deeper and larger," said Ortiz.

The economic and financial consultant predicts a slow recovery for Ecuador, with unemployment looming as the key "adjustment variable."

Since March alone, the lockdown has wiped out 150,000 jobs, meaning a total of 500,000 to 700,000 jobs could be lost by the end of the year, said Ortiz.

"Little by little people are going to be feeling the impact. We have to start getting used to having a little less income and stretching our money as far as it can go," Ortiz said.

Ecuadorian President Lenin Moreno has acknowledged the situation is dire, with the total fiscal deficit expected to reach 12 billion U.S. dollars: 8 billion in losses from the pandemic and 4 billion from the accumulated deficit.

In a televised interview on May 22, Moreno said "a little more than a third of the projected total income that Ecuador presumed it would have to finance its budget has been lost. Never in the history of Ecuador has there been such a tough situation."

The lockdown brought 70 percent of Ecuador's productive sector to a standstill. As recently as May 4, the sector began to resume activity under the "new normal" conditions of maintaining social distancing.

Ecuador, which according to government estimates saw sales losses of nearly 12 billion U.S. dollars, has received a loan of some 1.4 billion U.S. dollars from multilateral lending agencies, including the International Monetary Fund (IMF), to deal with th health crisis.

Moreno, whose final year in office began on Sunday, unveiled a series of economic measures to overcome the crisis, which have been rejected by unions and sparked social unrest.

The measures include cutting the budget and wages, and introducing labor and financial reforms.

According to political observer Fernando Casado, "the government's shock measures and counter-measures to tackle the crisis have not been enough."

"They have protected the business owners instead of the workers, instead of the poor. That leads many people, who lost their jobs and have no chance to survive, to flout the lockdown," said Casado.

Formal employment, which accounts for about 38 percent of the work force, will fall notably, as underemployment and unemployment rise, he said.

As of January, 5.1 million of the country's 8.3 million economically active workers had no adequate employment, according to the National Statistics and Census Institute (INEC).

"It is a return to normality with fewer jobs and less money. We are going to be entering a situation of greater instability in the country that I'm not sure is socially sustainable," said Casado.

President Moreno seems more optimistic.

"I am hopeful, because after a crisis there always comes a time of recovery and reactivation. That is what the movement of the economic curve says," Moreno said.

However, Moreno warned that in the absence of a recovery, Ecuador "will undergo bigger problems than we are now undergoing," and he urged the industrial sector to resume production in the post-pandemic new normal. Enditem

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