Ecuador notes - October 2024
Daniel Noboa's reelection probability is just under a coin flip
Drought, fires, power outages, debt, and security threats. Ecuador's problems are piling on top of each other. The continent's historic drought has caused hydroelectric capacity to decline. It's also made fires more likely, which has hit an electrical transmission system that already needed significant maintenance and upgrades. The power outages, originally planned for just a few 8 hour blocks at night, are now extending in terms of time (up to 14 hours per day) and dates.
When Noboa first announced those preplanned blackouts, he also announced increased security patrols because the country remains at war with the various gangs. While homicides are down from their peak earlier this year, assassinations against prison officials and threats against politicians and activists continue. The fact that it takes extra security to keep businesses and people from being robbed or killed during blackouts demonstrates that the situation remains out of the government's control.
Daniel Noboa cut short last week's trip to UNGA in New York to return to Ecuador to manage the crisis, which has worsened over the past few weeks. Ecuador’s president is a capable manager and campaigner, doing a great job attempting to oversee the responses to the many problems he has inherited and communicating about those efforts with the public. And still, citizens and voters only have so much patience. Same with bond markets.
Ecuador's minister of finance was in China last week. The country still owes China almost USD$3 billion, even as the challenges of Chinese-built electricity projects from the past decade are part of the problem in the country. The debt with China, much of which was taken on during Correa's term in office, complicates Noboa's conversations with the IMF and his efforts to improve the country's fiscal situation.
If you want to read more of my recent commentary about Ecuador, I wrote columns for World Politics Review about Noboa’s political battles against his vice president and the controversy over Yasuni oil drilling.
Noboa's approval rating is hovering around 50% in the polls (slightly above 50% according to Cedatos) and he remains more popular than his rivals in February's election. Noboa's goal is to keep this election focused on Luisa Gonzalez, the candidate backed by Rafael Correa. However, there are about a dozen other candidates in the election and they will get their opportunity to chip away at Noboa's popularity in the coming months. This is not a two way race.
Hxagon’s current election prediction model:
Daniel Noboa is 45% likely to win reelection
Luisa Gonzalez is at 35% likely to win
"Other" is at 20%.
45% feels too low when compared to his current approval ratings, how well Noboa campaigns, how much he will benefit from the powers of incumbency and running as a "war president", and how well Noboa polls against Gonzalez one-on-one.
45% feels too high when I read those paragraphs at the top and recognize these are not conditions in which incumbents win reelection.
I don’t promote my business too often in this newsletter, but this is a good time to mention that Hxagon is providing clients with regular updates, analyses, and predictions about Ecuador’s election. Reach out to info AT hxagon.com to schedule a call.