Since Ecuador adopted the US Dollar (鈥nd so printing money isn鈥檛 an option) Ecuador has one of the most stable economies in the world, and many of its policies limits inflation. It also produces most or all of the low and midgrade fuels available to consumers, and sets the prices for both across the country (only importing high grade and diesel fuels). Yes this means there is no competition amongst gas stations or suppliers over the cost of 2/3 of their product, defying international market trends, which of course has positive and negative outcomes for the economy overall and inflation in some ways.
This stability of monetary value and primary resource markets within the country moderates inflationary pressures on transportation and commercial production costs for foods, processed and manufactured goods for the average Ecuadorean. The impact this has on Ecuador鈥榮 participation in international trade markets, particularly in selling its oil and gas abroad, and the cost of imported foreign goods, is not always to the countries benefit. Ecuador is heavily dependent on selling as oil and gas to fund it鈥檚 social programs and development and maintenance of it鈥檚 infrastructure.
The recent pressures on the government to subsidize these natural resources will only serve to cut into the nations budget to reinvest in the country and operate it. Negotiations are ongoing to mitigate the negative impact of subsidies on the country as a whole, while still providing much-needed assistance to the large minority of disadvantaged Ecuadorians鈥� An important investment in the future of it鈥檚 citizens to allow more of its population to participate, and contribute, successfully in the economy. A delicate balancing act, with a third tipping point: The dangers of runaway inflation.
On the financial side, however, banks can offer high interest rate returns on investments and savings鈥� this is currently a huge positive for The country, attracting foreign investment and immigration bringing an influx of capital. Of course ironically enough at the same time this can increase inflation; As demand outstrips supply for products and services expected by immigrants / expats, but only newly being realized and provided by Ecuadorean business and producers.
One of the 鈥減roducts鈥� I鈥檝e seen affected by this influence has obviously been real estate. Demand was low during the pandemic but it鈥檚 definitely making a come back, as many foreign nationals AND Ecuadoreans living abroad return to buy property, invest in building projects, increasing the cost for both property, labour and construction, building materials, finishes and fixtures, etc. But there鈥檚 always a balance, as investment also improves the economy with positive increases in employment, (hopefully raising the average wages as well, which is always something that needs to be carefully watched, paired with costs), as many of these investors and returning Ecuadoreans start businesses, improving the local economy.
Inflation is not just an increase in cost, it鈥檚 more correctly defined as an increase in level and value of economic activity, reflected in both increase in costs AND financial return of investments, capital, value, and income levels for the country. So鈥� That鈥檚 why the long answer instead of the short one. It鈥檚 just complicated. 馃し馃徏鈥嶁檪锔�
