Foreign direct investment shows growth, but underlying challenges persist in key sectors.

Ecuador’s foreign direct investment (FDI) experienced a notable recovery in the first quarter of 2025, totaling $127.5 million. This represents a 17% increase compared to the same period in 2024, when the total reached $109 million. Despite this positive trend, experts remain cautious, emphasizing that the overall economic attractiveness of the country has not yet significantly improved.

The 2025 FDI figures are the highest seen since 2022 when the country faced significant declines in investment. Agriculture and mining were the primary sectors driving this recovery. The agricultural sector, encompassing farming, forestry, and fishing activities, attracted $48.3 million, accounting for 38% of the total investment. Meanwhile, mining investments totaled $45.7 million, making up 36% of the overall FDI in the first quarter.

However, sectors traditionally responsible for higher employment and stronger economic linkages, such as manufacturing and construction, reported a decrease in foreign investment.

Experts Weigh in on the FDI Landscape

Despite the uptick in FDI, experts like former Vice Minister of Economy Santiago Caviedes caution that the numbers may be misleading. Caviedes points out that much of the increase in FDI is due to factors like reduced debt payments between related companies and the reinvestment of profits, rather than new investments.

Freddy García, Chief Economist at Andersen Ecuador, agrees that the recovery might not be as robust as it seems. A significant portion of the FDI influx came from companies already operating in Ecuador, suggesting that while established businesses may be reinvesting, the country is still not attracting significant new foreign investments. He attributes this to Ecuador’s unresolved structural issues, including poor legal security and tax instability.

Comparing Ecuador’s Investment Attraction to Regional Neighbors

Although Ecuador’s $127.5 million in FDI is an improvement, the sum is relatively small compared to the country’s GDP. The first-quarter foreign investment represents only 0.1% of Ecuador’s GDP, a modest figure by international standards. In comparison, neighboring Colombia attracted $3.142 billion in foreign investment during the same period, equivalent to 3% of that country’s GDP.

Singapore, Spain, Chile, China, and Colombia were the leading sources of FDI into Ecuador in the first quarter of 2025, according to the Central Bank of Ecuador (BCE) report.

Mining Sector Faces Uncertainty Despite Early Growth

Ecuador’s mining sector has shown significant improvement in 2025 after a sharp decline in 2024. The first quarter saw a 44% increase in mining FDI compared to the same period last year, with $45.7 million in investments. This is a welcome reversal for a sector that experienced a drastic drop from $197 million in 2023 to $90.7 million in 2024.

Several mining projects have contributed to the recovery, including the commencement of construction on the El Domo-Curipamba copper mine in Bolívar province. Curimining, a subsidiary of the Canadian company Silvercorp Metals, is investing $323 million into the project. Additionally, the La Plata mine, a copper, silver, and zinc project by Canadian company Atico Mining, is expected to begin construction by the end of 2025, contingent on the completion of an environmental consultation.

However, mining companies are facing a potential setback due to the introduction of a new mining inspection fee, which must be paid by companies holding concessions by July 31, 2025. The fee is based on the size (in hectares) of the concession, and companies in the exploration phase, which tend to hold larger areas, will be most affected. The Ecuadorian Mining Chamber has warned that the fee could discourage new investments in exploration, a critical stage in the mining process.

In contrast, Chile and Peru continue to attract large sums for mining exploration, with Chile receiving over $640 million and Peru over $580 million in 2024. Ecuador, in comparison, received only $67 million.

The Road Ahead for Ecuador’s Foreign Investment

While the 2025 recovery in FDI offers a glimmer of hope for Ecuador’s economy, experts stress that the country must address its structural challenges to remain an attractive investment destination. As long as legal and tax issues remain unresolved, foreign investment may continue to flow in limited amounts, and Ecuador will struggle to keep pace with its regional neighbors in terms of attracting investment.