Stylised facts on the Economy of Ecuador in 2018:
1. Real estate bubble
2. Rising levels of private debt
3. Low salaries with respect to private debt and real estate market values
4. Low interest rates with respect to the intrinsic political uncertainty and default risk of the debtors
5. Adoption of the US$ as the national currency, that veils the underlying pressures on the currency from the international flows of capital
6. Inflow of foreign capital that is attracted by the adoption of the US$ (thus no risk of devaluation of the currency)
7. Asset bubble
8. Financialization of the economy
9. Dependency from the oil industry for about 36% of the national exports
10. Deep interconnection with the US (and its satellites) economy and financial system - if the US economy contracts, so does Ecuador.
Conclusion: in case of a global recession with a reduction of the oil price and contraction of demand from oil from abroad, as Ecuador has renounced to its monetary independence then the sole adoption of fiscal austerity may contribute to reduce the internal demand for foreign products (imports), deflate asset prices and restore the competitiveness of the manufacturing export industry - in order to maintain a balanced commercial trade balance.
- Luca Bindi, LL.M. (Vaduz)
Conditions:
The reader agrees with the following conditions.
The content is offered with the sole informative purpose, moreover it is exposed without any guarantee and it does not constitute any form of investment advice.
Any action undertaken by the reader on the basis of the content, analysis or opinion is intended to be under the sole responsibility of the reader.
No person may have any claim of any nature and in any case arising from or in connection with the information that is provided here by the author. The amounts, flows, stocks, values and dates that are provided are intended solely for indicative purposes and the author does not warrant the correctness, the accuracy and the completeness of the information that is provided here.
For omissions, mistakes or copyrighted material the reader is kindly pleased to inform the author by writing to bindiluca@gmail.com
1. Real estate bubble
2. Rising levels of private debt
3. Low salaries with respect to private debt and real estate market values
4. Low interest rates with respect to the intrinsic political uncertainty and default risk of the debtors
5. Adoption of the US$ as the national currency, that veils the underlying pressures on the currency from the international flows of capital
6. Inflow of foreign capital that is attracted by the adoption of the US$ (thus no risk of devaluation of the currency)
7. Asset bubble
8. Financialization of the economy
9. Dependency from the oil industry for about 36% of the national exports
10. Deep interconnection with the US (and its satellites) economy and financial system - if the US economy contracts, so does Ecuador.
Conclusion: in case of a global recession with a reduction of the oil price and contraction of demand from oil from abroad, as Ecuador has renounced to its monetary independence then the sole adoption of fiscal austerity may contribute to reduce the internal demand for foreign products (imports), deflate asset prices and restore the competitiveness of the manufacturing export industry - in order to maintain a balanced commercial trade balance.
- Luca Bindi, LL.M. (Vaduz)
Conditions:
The reader agrees with the following conditions.
The content is offered with the sole informative purpose, moreover it is exposed without any guarantee and it does not constitute any form of investment advice.
Any action undertaken by the reader on the basis of the content, analysis or opinion is intended to be under the sole responsibility of the reader.
No person may have any claim of any nature and in any case arising from or in connection with the information that is provided here by the author. The amounts, flows, stocks, values and dates that are provided are intended solely for indicative purposes and the author does not warrant the correctness, the accuracy and the completeness of the information that is provided here.
For omissions, mistakes or copyrighted material the reader is kindly pleased to inform the author by writing to bindiluca@gmail.com
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