Violence Costs Ecuador USD 12.2B Annually As Illicit Flows Enter Formal Economy

Cost estimate

Violence and crime cost Ecuador more than USD 12.2 billion per year, equivalent to USD 1,127 per person, according to a 2026 IAEN study cited by La Hora.

The estimated cost equals 6% of Ecuador's GDP. The public-sector cost of confronting violence and crime is estimated at 3.57% of GDP, above a regional average of 3.44%.

Distribution of costs

The IAEN analysis frames violence as an economic-transfer problem as well as a security problem. Households, companies, and the state carry the costs while criminal revenues seek entry into legal-looking businesses, trade, and financial structures.

Across Latin America, the report cites direct crime costs split between 47% private expenses by households and companies, 31% public spending, and 21% social costs.

The scale comparison is material: the cost of crime is equivalent to 78% of Ecuador's public education budget, twice social-assistance spending, and 12 times research and development spending.

Illicit finance

The study estimates that between USD 2.1 billion and USD 5.4 billion may be linked annually to illicit financial flows associated with organized crime in Ecuador.

Of that total, between USD 1.5 billion and USD 3.8 billion may be laundered inside the Ecuadorian economy.

The report also identifies approximately USD 2.5 billion in discrepancies between Ecuador's declared exports and partner-country import records. La Hora says those gaps could be related to underinvoicing, fictitious trade, or customs manipulation.

Sector impact

Exporters have increased private-security spending from about USD 150 million in 2022 to more than USD 200 million currently. Those costs include surveillance, satellite tracking, armed guarding, and cargo insurance.

Tourism has also been affected. In 2023, hotel occupancy fell to 5% to 10% in some periods, while Santa Elena visits dropped as much as 75% in the last quarter of the year.

The local-economy multiplier is also measurable. Municipalities in Latin America with homicide rates 10% above average record economic activity about 4% lower, and companies can face crime-related costs equal to about 7% of annual sales.

What to watch

• Whether export-security spending continues rising above the current USD 200 million level
• Whether customs and trade-data discrepancies trigger stronger enforcement
• Whether tourism recovery varies by corridor security conditions
• Whether public spending on violence response crowds out social and productivity investment

Source: La Hora.