Ecuador’s Presidential Election: The Race to Save the Economy

In the midst of an out-of-the-ordinary year in terms of economic performance, Ecuador elected a new president on Sunday, April 11th. After facing a problematic ending to 2019 and a deepening crisis in 2020, the presidential race tightened between Guillermo Lasso and Andres Arauz. Due to the delicate state of the economy and the challenging road ahead, the presidential election became one of the most important in Ecuadorian history.

The process of the Ecuadorian presidential election relies on a democratic two-round system. The first rounds were held on Sunday, February 7th, in which more than a dozen presidential candidates participated. Despite the multiple political parties, left-wing candidate Andres Arauz led the polls with 32.72% of voters, followed by center-right former banker and businessman Guillermo Lasso with 19.74% of votes, and Indigenous leader Yaku Perez with 19.39%.

After the close first voting round, Arauz and Lasso headed to the final rounds, in which they competed for a vote of over 12 million eligible Ecuadorian voters. After extensive campaigns, which included the candidates using TikTok to appeal to the young population, Guillermo Lasso became the newly elected president with just over 52% of the votes. Lasso will take office in May, and will immediately guide Ecuador through some of the most daunting challenges in its history.

The downfall of the Ecuadorian economy began long before the COVID-19 pandemic struck the world. In 2019, former President Lenin Moreno adopted a series of austerity measures to qualify for a $4.2 billion loan agreement with the International Monetary Fund (IMF). For the purpose of decreasing public debt, some of these statutes included terminating the state subsidy on petrol, a decision met with wide disapproval. In an effort to force the withdrawal of such measures, Indigenous parties, transportation unions, and student groups conducted violent protests in Quito, paralyzing many sectors of the economy and halving oil production. With an already struggling economy due to declining oil prices (a crucial export) and robust debt from the previous Correa administration, these protests put Ecuador in a frightening financial position. Damages from looting, violence, and destruction of infrastructure resulted in estimated losses of over $800 million. By the end of 2019, the Central Bank registered a 0.08% contraction in the Ecuadorian economy as a consequence of these protests and decelerating productive activity.

Despite initial hopes of Ecuadorian economic activity gaining momentum, the COVID-19 pandemic led to a second national paralysis in under six months. Strict lockdown measures, mobility restrictions, and other health protocols resulted in Ecuador’s GDP contracting by an astonishing 8.9% in 2020. Approximately 70% of businesses faced inactivity from the pandemic and more than half a million people lost their jobs. On top of employment and financial uncertainty, Ecuador’s supply of vaccines remains low. Furthermore, the recent spike in COVID-19 cases has led the government to impose new curfews and lockdown restrictions, making a 2021 economic recovery uncertain. While hopes relied on the newly elected candidate to prioritize the pandemic, his introduction of new social and economic policies regarding international relations, investments, and healthcare to stimulate the economy ahead of the crisis is just as vital. Given these extraordinary circumstances, the votes cast by the Ecuadorian people were more important than ever.

Arauz’s campaign promised a grant of $1,000 to one million Ecuadorian families and a return to the socialist policies of former president Rafael Correa. This candidate was likely to dismiss negotiations with the IMF and increase taxes for multinational firms to increase revenue while stimulating local industries. On the other hand, Lasso’s policies embrace international trade, tourism, and foreign investments to place Ecuador’s goods and services in global markets. Upon election, Lasso continues to offer universal healthcare and policies that uplift entrepreneurship and increase employment. Lasso’s victory will also affect South American political dynamics, as it symbolizes a step away from the leftist tide that has been prominent in the region.

Ecuador’s geography awards the country with enormous economic potential. Despite having the third-largest oil reserves in South America and a position as a leader in exporting shrimp, bananas, cocoa, and flowers, Ecuador has failed to channel this potential in the past to spur economic growth. The winning candidate has an obligation to improve the Ecuadorian economy and to repower growth by diversifying exports, encouraging investments, and reassessing public sector management.

Additionally, the fate of the Amazon rainforest remains a concern. While political debates have failed to address environmental policies, such discourse is crucial for the future of biodiversity. Covering over 40% of total Ecuadorian land and housing more than 11 Indigenous nations, the Amazon rainforest is suitable for oil extraction and mining; nevertheless, these activities will put the wellbeing of locals in danger. Lasso’s address of his plan for the conservation of the Amazon is imperative to maintain the health of the ecosystem and the welfare of Indigenous groups. 

It is undeniable that the elected president has a difficult road ahead. Despite economic activity increasing over 3% in December 2020, Ecuador has reached a point of disbelief towards politicians and their promises. The current tumult is pushing millions into despair, especially as the economy continues to fall short of those of its South American neighbours. Not only should Guillermo Lasso find ways to unite a country that has been immensely divided by the economic and social policies of the last decade, but Lasso must also guide the struggling country into a path of prosperity and stability.