Ecuador closed 2022 with a new record in non-oil and non-mining exports of $18,000 million -$20,000 million if mining companies are included-, as projected this Wednesday, January 25, by Felipe Ribadeneira, president of the Ecuadorian Federation of Exporters (Fedexpor). ).
Ribadeneira clarified that it is a projection, since the official figures are only consolidated until November 2022, however, he assured that the real ones will be very close to those projected by the union. This double-digit growth, according to the head of Fedexpor, corroborates the increases that occurred in previous years when records were also set in non-oil exports, such as in 2020 with $15,000 million and in 2021 with $17,000 million.
Record in the export sector in 2022, but with different realities
However, he warned that the performance of exports for 2023 does not look so encouraging, assuring that since the last two months of 2022 and in the first month of this year there is evidence of a contraction in demand of 4%.
This is due to several external factors, among which the energy crisis and the inflationary waves in Europe and the United States of between 6% and 8% stood out, which has made Ecuadorian products more expensive.
“In 2023, the ideal would be to sustain this and growth would only be in single digits,” Ribadeneira said, since a strong recession is projected in the destination markets this year.
For his part, Xavier Rosero, vice president of Fedexpor, analyzed that the undesirable scenario for the export sector would be presented with a lower productive capacity, added to lower prices in those markets.
Regarding the results of 2022, Rosero highlighted that the aquaculture and fishing sector was the one that grew the most with $2,196 million more in foreign currency compared to 2021, 35% more; while in volume it sent 189,000 tons (+16%). However, the one that grew the least was the agricultural sector, which stagnated with a weak 1% in currencies with only $70 million more than in 2021, but in volume it fell 4% by sending 314,000 less tons to its markets.
Shrimp leveraged exports in 2022, but warned that the good development of this product at the beginning of 2022 is not the reality that occurred in the last quarter of the year and in January 2023.
Non-oil exports are consolidated with shrimp, the star product of 2022 in Ecuador
“Prices are falling and therefore this dizzying growth that we saw at the beginning of 2022 is not a reality now,” lamented the vice president of Fedexpor.
In the case of manufacturing, they grew 7% in 2022 by generating foreign exchange for $131 million in exports, especially to countries in the region, however, like the agricultural sector, it fell in volume by -13% to ship 276,000 fewer tons of products.
In the agricultural sector, the drop in 2022 represents, in the specific case of bananas, a drop in production of two years. Rosero analyzed highlighted among the factors that affected the higher cost of inputs, which grew up to 115% more in some of them, the deterioration of competitiveness affected by the increase in wages and little labor flexibility, lack of financing and the tax burden ; in addition to logistics costs and insecurity that has cost the export sector around $150 million.
Added to this is the strengthening of the dollar, which generated up to 20% depreciation of competing currencies, such as Colombian products that were 20% cheaper in 2022 only due to an exchange issue.
“In 2022 the sector assumed $150 million in private security and this figure is increasing more and more… at the end of the day it is a cost that does not necessarily exist in other countries,” warned Rosero, who assured that there are factors that should also be taken into account for this year’s export prospects.
For example, that the estimates of world growth were reduced by almost half, going from 3% to 1.7%, in addition to a lower demand due to the fall in prices that will generate a price war in which Ecuador would be at a disadvantage due to to which depreciated currencies adapt better.
Health of the productive chain is going through a bad time, despite record exports and supposed balance surplus
“Ecuador has a rigid structure and it is difficult for it to win in a price war (…). Even if the dollar does not strengthen, our competitors are weakening their currencies and they are going to have an artificial competitiveness and they are going to be cheaper”, Rosero projected, who assured that this behavior has already begun to be felt in the first weeks of the year.
Meanwhile, the collateral effects of the Russian-Ukrainian conflict will continue, such as the increase in fuel and the high costs of agro-inputs. In addition, Rosero indicated that the Chinese market must be closely monitored, because if new mobility restrictions are implemented due to health policies, they could slow down the shipment of Ecuadorian products.
Good expectations for trade agreements in 2023
There are also good expectations in 2023 for the export sector and they are focused on signing trade agreements.
Felipe Ribadeneira highlighted Ecuador’s trade agenda and the agreements that have already been closed in their technical phase, such as Costa Rica and China.
He recalled that Ecuador currently only has $4 of every $10 protected by trade agreements and that after the signing of the agreement with the Asian giant it will rise to $6 of every $10 protected.
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He regretted that negotiations with Mexico have not been completed. Regarding other markets, he assured that the United States must be insisted on, regretting that Ecuador is the only country on the Pacific coast that does not have an agreement with that country, which means another disadvantage compared to competing nations.
Xavier Rosero stressed that opening North America, especially Canada, is a good strategy to activate the efforts to start negotiations with the United States, the market that continues to be the one that receives the largest number of products from Ecuador.
Meanwhile, the challenge with China, which is the market that generates the most foreign currency for the country, is to decentralize the offer; and with South Korea, consolidate the agreement to benefit food products that currently pay tariffs of between 15% and 20%. (YO)
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