Citi Research predicts market uncertainty ahead of Ecuador’s presidential election, with potential impacts from U.S. tariffs and global shifts.
As Ecuador approaches its decisive presidential election on April 13, 2025, the international market is weighing the potential outcomes of a victory by Daniel Noboa or Luisa González. A recent analysis from Citi Research sheds light on how each candidate could influence the economic outlook for Ecuador and its standing within Latin America in the coming year.
Market Sentiment and Election Impact
The second round of Ecuador’s elections has sparked growing uncertainty in the financial world. According to Citi Research, market sentiment shifted after the first round of voting, with initial optimism about a Noboa victory giving way to cautiousness regarding the possibility of Luisa González taking office. Esteban Tamayo, economist for Central America and the Andean region at Citi Research, noted that this shift could influence Ecuador’s relationships with global financial institutions, particularly the International Monetary Fund (IMF). He highlighted that a González win could lead to limitations on private investment, as market expectations adjust to a different political landscape.
Tamayo pointed out that Noboa, the current president, is viewed more favorably by international markets. “Noboa is considered the more right-wing and market-friendly candidate,” he explained. This perception stems from his inclination towards policies that are seen as conducive to international aid and investment. Noboa’s track record as a centrist leader during his previous year and a half in office strengthens the market’s expectation that his victory would support the country’s economic stability, which is projected to grow by 1.6% in 2025, according to the IMF.
Economic Growth Projections
Citi Research, part of Citigroup, anticipates that economic growth in Latin America will remain subdued, with an average expansion of 2.2% in 2025. However, the forecasted growth rate for Ecuador appears less optimistic than some of its regional counterparts. The IMF projects a slight uptick in Ecuador’s growth, but Citi Research’s Ernesto Revilla, chief economist for Latin America, indicated that the actual growth figure for Ecuador might fall below expectations, without providing specific numbers.
U.S. Tariffs and Regional Vulnerability
Beyond the election, Citi Research also highlighted the broader economic environment, particularly the impact of U.S. tariffs announced by President Donald Trump on April 2, 2025. The new trade policies could reverberate throughout Latin America, with countries such as Mexico facing significant risks due to their trade surplus with the U.S. and their role as major players in migration and drug trafficking issues. “All Latin American countries are vulnerable to the uncertainties generated by the Trump administration’s trade measures,” said Revilla in a recent video conference.
The analysis identified Mexico as the most vulnerable country in the region, particularly due to its trade surplus with the U.S., a key issue for Trump’s administration. Other nations in the region, such as Colombia and Central American countries, could also face heightened risks from U.S. policies on migration and drug trafficking. In contrast, countries with weaker economic ties to the U.S. or less exposure to U.S. policy concerns might face less immediate impact.
Regional Economic Vulnerability Table
Citi Research created a vulnerability index to assess how susceptible each Latin American country is to the effects of Trump’s tariffs. According to the index, Ecuador ranks moderately on the scale, with a vulnerability score of 6 out of 10. This is comparable to Peru, indicating that while Ecuador is not as exposed as some of its regional neighbors, it still faces risks from the ongoing shifts in U.S. foreign policy.
The vulnerability index also highlights the varying degrees of exposure across the region. Mexico tops the list with the highest vulnerability at 9.2 points, followed by Brazil at 7.5 and Honduras and Colombia at 7. Ecuador, positioned alongside Peru, faces moderate challenges. The country’s exposure to U.S. trade imbalances, drug trafficking, and migration flows plays a role in its overall vulnerability.
Geopolitical Shifts and Regional Economic Outlook
The analysis by Citi Research further explored the shifting geopolitical dynamics under President Trump’s administration. With the U.S. taking a more aggressive stance towards China’s growing influence in Latin America, countries with stronger ties to China, such as Ecuador, could face additional pressure. As Revilla noted, the region is experiencing a profound reconfiguration of global geopolitics, and the uncertainty stemming from these changes is likely to persist for an indeterminate period.
Despite these challenges, Citi Research remains cautiously optimistic about Latin America’s economic trajectory. The region is expected to grow by 2.2% in 2025, with projections increasing slightly to 2.4% in 2026. However, this growth is heavily influenced by the performance of Brazil and Mexico, the two largest economies in the region. Both are projected to face slower growth, with Brazil’s growth forecasted to decelerate from 3.4% in 2024 to 2.2% in 2025. Mexico, facing significant exposure to U.S. policies, is expected to see minimal growth in 2025, with a meager 0.2% increase before recovering to 1.6% in 2026.
As Ecuador approaches its crucial presidential election, the outcome could have significant implications for both the domestic economy and the international market.
While a Noboa victory is seen as more favorable by the market due to his centrist, market-friendly policies, the uncertainty surrounding the election and the broader economic environment—shaped by factors such as U.S. tariffs and global geopolitical shifts—suggest that the year ahead will be marked by cautious optimism and volatility.
The region’s overall vulnerability to external shocks, particularly from the U.S., will likely shape the economic landscape of Latin America in the coming years.
The implication that left leaning victory for Ecuador’s Presidency is not a good sign for the economy doesn’t hold water.The 10 democratic socialist governments in northern Europe typically rank high by Forbes and Market Watch as top countries to invest despite their offering cradle to grave economic security for their citizens.
In Bolivia under Morales’ democratic socialist government (over his 14 plus years administration) saw its economy prospering too.
Even Venezuela under U.S. economic sanctions has turned from oil dependency to developing its agricultural sector and reportedly experienced a 5 percent 2024 economic growth rate.