By FocusEconomics
Centre-right Ecuadorian President Daniel Noboa secured a decisive re-election victory in the 13 April runoff vote, defeating leftist Revolución Ciudadana (RC) candidate Luisa González with 56 percent of the vote. The margin of victory significantly exceeded poll projections, signalling widespread public support for Noboa’s security-focused and market-oriented platform. Below is an analysis of the economic and political impact, plus our Consensus Forecasts for Ecuador and the wider region.
Contested result: González has refused to concede, citing irregularities during the vote and calling for a recount: On the eve of the runoff, Ecuador declared a state of emergency in seven of its 24 provinces—including the capital Quito—due to escalating gang-related violence. While it’s unclear whether the emergency decree affected turnout or voter access, neither the EU nor the Organization of American States (OAS) have flagged any significant incidents.
Market reactions: Financial markets responded positively to Noboa’s victory. Ecuadorian bonds, which had fallen sharply after the first-round deadlock, soared following confirmation of a second term for the pro-business incumbent president. Investors widely view Noboa as the candidate most likely to preserve fiscal discipline and maintain strong relations with international lenders.
Noboa will face challenges: Security remains the administration’s most urgent challenge. Ecuador’s strategic location between Colombia and Peru—two of the world’s largest cocaine producers—has turned it into a crucial trafficking hub. The resulting surge in gang violence has disrupted economic activity, undermined investor sentiment, and contributed to a 2024 contraction in GDP that was the joint-second-sharpest on the continent. Compounding the crisis, a severe drought last year led to widespread power outages. In 2025, declining oil prices pose an additional headwind for the South American economy, with crude accounting for a significant share of export revenues.
Fiscal consolidation: The re-elected president will need to navigate these headwinds while maintaining a firm grip on fiscal policy. The IMF has previously endorsed Noboa’s decision to raise the VAT rate from 13 to 15 percent in April 2024—a move toward fiscal consolidation, which remains a key condition for receiving the remaining USD 2.5 billion in IMF funding.
Our panelists’ forecasts are gloomy: Ecuador’s economy is expected to rebound in 2025 amid looser financial conditions and as improved weather boosts hydropower production and eases electricity shortages. That said, there will be a deceleration in goods and services exports caused by shakier US and Chinese economies plus the gradual shutdown of the Block 43 oilfield. Taking a broader view, Ecuador will be one of Latin America’s weaker performers in 2025 despite a favorable base of comparison; this regional underperformance is set to persist in the coming years, due to the weak business environment and lack of economic diversification.
Insight from our analysts:
On future IMF funding to Ecuador, Goldman Sachs’ Sergio Armella commented:
“Being an election year, the 2024 budget rolled over to 2025, and president Noboa will have 90 days to present a budget proposal to the National Assembly. We note that the extended fund facility (EFF) program that the government subscribed with the IMF in 2024 targets additional spending cuts for 2025. The program with the IMF also foresees a gradual re-access to external debt markets in 2025 (with US$1.5bn), which we see as overly optimistic. We believe, however, that a renewed Noboa government could work to expand the current program. Alongside additional reforms, a program with the Fund could go beyond just rolling over the principal payments that Ecuador must make to the IMF in the coming years.”
On future governability, EIU analysts stated:
“The election outcome will ease the political instability that has plagued Ecuador since 2022, which includes a series of impeachment attempts, a presidential turnover and multiple elections. Noboa’s victory will reduce that instability given the clear (and larger than expected by local polls) margin of victory and the fact that his ADN party will become the second-largest bloc in the legislature. This will be enough to shield the incoming administration from potential impeachment efforts against Mr Noboa and his cabinet, to the benefit of government stability. Still, addressing multiple challenges—rampant violence, low economic growth and energy shortages—will be problematic, carrying risks to his popularity and sustaining the potential for social unrest during his four-year term.”
Our latest analysis
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