Cuenca News

Money sent home by Ecuadorians living overseas is vital for some local communities

Although its overall impact has fallen in recent years, money sent home from Ecuadorians living abroad — or remittances, as the payments are commonly known — remains a vitally important part the country’s economy.

Remittances are critical for towns such as Gualaceo.

In 2016, remittances totaled $2.6 billion, mostly from the U.S. and Spain, accounting for 2.7% of Ecuador’s Gross Domestic Product (GDP). By contrast, remittances in 2001 totaled $3.1 billion, but represented almost 9% of the GDP of a much smaller national economy.

“These payments are still very important to the country but they are a much smaller component of the overall economy than they were in the past,” says Rodrigo Mendieta, an economics professor at the University of Cuenca. “Two decades ago, the country would have had a difficult time surviving without them.”

Although there are no local statistics provided by the Ministry of Finance, Mendieta says the importance of remittances is much greater in southern Ecuador than in the rest of the country. “On a per capital basis, Azuay, Canar, and Loja provinces sent the largest number of residents abroad in the 1990s and early 2000s than other regions,” he says. “In some communities, such as Giron and Gualaceo, remittances are 10%, 15% or more of the economy.”

According to a 2012 study by Ecuador’s census office, as much as 20% of the population of some rural communities left the country in the in the 1990s to find work in North America and Europe.

Mendieta says the payments have had an important “palliative” affect for the country. “Over the years, the economies of the U.S., Canada and Europe have remained strong while Ecuador’s economy has suffered,” he says. “The money from abroad was a life saver in hard times.”

Through the first six months of 2017, Ecuador has received $1.325 billion in remittances, which represents a 2.7% increase over 2016. The finance ministry estimates the 2017 total to reach $2.75 billion.

  • edgeof 2

    Let’s see what trump and company can do bout that – and good bye dreamers – true Americans – cheers !

  • Gordon

    I wonder what fraction of those transfers are to us Gringos living here in Ecuador, but with SS, pensions, or other income paid in the US, but transferred down here for us to live on. The fact that southern Ecuador, where the larger fraction of Gringos is reported to live, is the largest recipient of these transfers, makes me wonder.
    Clearly, we are far from making all the transfers, but 10,000 Gringos, transferring $1000 per month each (assuming a couple living on $2K per month as typical) would total to $120 million per year, or about 5% of the total.

    • StillWatching

      10,000 gringos? Where does that come from? Are you referring to all the gringo expats in Ecuador? No reliable estimate claims there are 10,000 expats in Cuenca.

      • Gordon

        No. I was referring to southern Ecuador. The general estimate I have heard for Cuenca is around 5,000, but when you include Loja, Vilcabamba, the Yunguilla Valley, etc., there will be quite a lot more. In any case, I was just using round numbers to estimate what fraction of that transfer might be via the Gringos.
        I did hear from an Embassy official a few years ago that there were about 20,000 citizens of the USA living in all of Ecuador. A fair number of those will be Ecuadorians who have dual citizenship, but I took half of that as an approximation for the number living in southern Ecuador.

        • StillWatching

          Thank you. Your method of estimation seems reasonable but it does remind me of how the number of expats living in Ecuador and specifically, in Cuenca, seems to be an emotional issue for many. Those that have a vested interest or who are emotionally invested in the issue, seem to over-estimate the actual number, whatever reality may be. I have no better idea than anyone else what reality is and it always causes me to wonder why an accurate number can’t be arrived at through examination of public records.