Political Risk Analysis - Waning Support For AP Amid Weaker Economic Outlook - SEPT 2017

BMI View: Ecuador ' s ruling AP party will struggle to maintain its grip on power over the coming decade amid weaker economic activity and a deteriorating fiscal position. Internal divisions within the party will underpin political risks and the potential for a change in policy direction.

Social and political tensions in Ecuador will remain elevated in the coming years following a hotly contested 2017 general election. The election highlighted the country's polarized electorate and waning support for the ruling Alianza Pais (AP), which has been in power since 2007 and reshaped the country's politics in a more interventionist mould. Structurally weaker economic growth amid weaker oil prices and poor investor and consumer confidence will place economic policy high on the minds of the Ecuadorian electorate over the next decade ( see 'Lower Oil Prices And Business Environment To Weigh On Growth ' , July 5), while a deteriorating fiscal position will limit the ability of the AP to stimulate the economy via social and infrastructure spending, as it has done over the past decade. As a result, we expect waning support for the AP ahead of the next general election in 2021. Additionally, an anti-corruption drive could open a rift within the AP between supporters of long-term former President Rafael Correa and current President Lenin Moreno.

Correa Legacy Will Live On Under Moreno

AP Margin Of Victory Narrowing
Ecuador - Presidetnial Election Results, % of Vote
Source: CNE, BMI

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