At least two major trade agreements are expected to be finalized and investment and labor market reforms to be approved. The ultimate goal is to grow more and create jobs.
The end of 2021 was more positive than expected in terms of growth and employment, although the pre-pandemic levels have not yet resumed.
All projections indicated that the economy would grow at 2.5%; but the percentage was higher than 4% of the Gross Domestic Product (GDP). Around 530,000 suitable jobs were recovered from the more than 800,000 lost in 2020.
In this sense, the main goal for 2022 has to do with maintaining growth at least at the same levels as last year. In addition to specifying the investments and commercial agreements offered since the beginning of the current Government.
Growth and employment
In order to advance in the campaign promise of generating around 500,000 new suitable jobs per year, the country’s economy must grow by at least 4% during this 2022.
For this, one of the main pillars will be for the Government to do a true purification of the paperwork that unnecessarily takes money and time from companies, especially from micro and SMEs.
Likewise, it is also important that credits at 1%, of up to $ 5,000, are made for producers in the agricultural sector.
Another point is that distortionary taxes continue to be eliminated. The first step is the reduction of one percentage point of the Foreign Currency Exit Tax (ISD) during this 2022.
Trade agreements
Until June 2022, the Government hopes to achieve two major objectives within its trade opening strategy. In the first place, in this month of January the dialogues are resumed to finally achieve a trade agreement with Mexico.
This market is a great opportunity to increase exports and generate more employment linked to agribusiness. In addition, the signing of that treaty is the last prior step for Ecuador to request inclusion as a full member in the Pacific Alliance, thus opening the door to a market of almost 220 million potential consumers.
On the other hand, the authorities must continue to lay foundations in the relationship with the United States; and to get the Tariff Preferences System to operate again, while signing a trade agreement would remain for 2023.
Foreign Investment and concessions
One of the great challenges is that at least part of the capital that is leaving Mexico, Peru, Colombia and Chile comes to Ecuador to finance investment projects, more companies and job creation.
These projects include concessions and even sales of state assets. The Government is committed to the mechanism of Public-Private Partnerships attracting at least $ 3,000 million from foreign investors.
In the first fortnight of January 2022, it is expected that an Investment Law will be sent to the Assembly. These regulations should be the definitive accolade for more businesses to open in the country.
Labour reform
Within the failed Law of Opportunities, rejected by the Assembly at the end of September 2021, the Government of Guillermo Lasso included a package of changes in the hiring and labor relations system.
That package generated rejection in political, social and union sectors.Therefore, Francisco Briones, undersecretary of the cabinet of the Presidency, announced that in January 2022 a new attempt to position a labor reform will begin.
On this occasion, before sending the initiative to the Assembly, it will seek to generate consensus with the majority of civil society actors. The Government wants to establish more flexible hiring mechanisms, since currently more than 5 million Ecuadorians survive in the informal sector.
Oil production
After the pumping of crude oil was suspended in the two main pipelines of the country for almost the entire month of December 2021, oil production plummeted by more than 81%.
Activities in the SOTE and OCP resumed between the 30th and 31st of last month, but the recovery of the lost levels will take until the end of February 2022.
Ítalo Cedeño, who is the new manager of Petroecuador, will have in his hands the challenge of going from the 91,000 barrels to the 485,000 barrels per day that was had before the crisis.
This challenge is important to prevent the country from continuing to lose income and complicate public finances even more. (JS)
