Business loses from Covid lockdown total more than $14 billion – and they continue to mount
Ecuador’s Ministry of Production reports that business loses from March 16 to May 24 totaled more than $14 billion as more than 70 percent of the of the country’s economic activity was shut down by the coronavirus.
“With very few exceptions, the loses affected all sectors of the economy and been devastating for many of them,” says David López, technical director of the Quito Chamber of Commerce. “What is worse is that the loses are still growing which is why we see estimates of an economic decline of eight ten percent for 2020.”
According to López, a full recovery is not possible until the country ends all health emergency restrictions, especially social distancing. “We are happy that many rules are being relaxed under the yellow light standard but this is not nearly enough to return the economy to normal,” he says. “We will see many, many bankruptcies.”
Among business sectors that are still at an economic standstill are manufacturing, real estate, tourism, car sales, the production ministry says. “The improvement in these and other sectors will be gradual and, unfortunately, this will not be fast enough for many individual businesses,” says Minister Iván Ontaneda.
A major problem to be dealt with as the economy reopens, says Ontaneda, is growth of informal sales during the health crisis. “The number of street vendors have doubled during the emergency and we must control this as businesses reopens or it will cause more hardship for legal, licensed sellers,” he said, adding that the control must be applied carefully since many informal sellers live “hand to mouth” and punishing them for trying to survive is not practical or humane.
According to López, the business sectors that did well during the lockdown were pharmacies, grocery stores and delivery services.
López has special worries for the tourism and hospitality sector. “We’re estimating that a third of the country’s restaurants and hotels may go out of business,” he says. “Some of this may be temporary but most closings will be permanent.”
The recovery for restaurants will be especially difficult, he says, due to the fact that many people will have less disposable income and will be more included to save what they have. “There will be a change of attitude that will hurt the consumer culture,” he says.