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Economic crisis starts to show up in Ecuador

Declining oil prices, exports will have bigger effect in '09

By John Zarocostas THE WASHINGTON TIMES | Tuesday, November 4, 2008

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The global economic crisis that began in the United States has spread to several nations in Latin America - and Ecuador, an Andean nation dependent on oil exports, is among the hardest hit.

A report by the U.N. Economic Commission for Latin America and the Caribbean in late October warned that the crisis "has started to filter through to the Latin American economies and will have deeper repercussions in 2009."

The Ecuadorean economy of 13.9 million people is feeling the twin effects of the dramatic collapse in world oil prices and a drop in market prices of other commodity exports.

"We know we cannot escape the effect of the crisis; we are not immune," said Eduardo Egas Pena, Ecuador's deputy minister of foreign relations, commerce, and integration.

"We start to see some of the effects of the crisis on prices. Some have gone down, and also has demand, particularly for products on the market in big quantities, like flowers, shrimp, cacao, bananas," he said.

A second effect on Ecuador, Mr. Pena said, is that remittances sent by Ecuadorean emigrants have been reduced by 30 percent.

Before the financial crisis, remittances from Ecuadoreans working abroad - mainly in Europe and the U.S. - have been about $3 billion per year.

In 2007, Ecuador's merchandise exports, boosted by high prices for oil and other commodities, increased in value terms by 8 percent to $13.7 billion, with agricultural products accounting for about 30 percent and fuels and mining - a category that includes oil - about 60 percent, according to the World Trade Organization.

The U.S. was the major destination and accounted for 43 percent of Ecuador's exports, followed by the European Union, with 13 percent.