Country Report Bolivia April 2009

Outlook for 2009-10

• Presidential and legislative elections are due to take place on December 6th 2009, with Evo Morales expected to be re-elected. Opposition candidates will do well in eastern regions, sustaining deep regional cleavages.
• The suspension of Bolivia's preferential trade access to the US under ATPDEA will hit manufacturing and exports. Any change of stance from the US toward Bolivia will depend on compromises from the Bolivian government.
• Government plans to use savings to boost spending, coupled with falling revenue from extractive industries, will lead to NFPS fiscal deficits of 3.5% of GDP in 2009 and 2% in 2010.
• Collapsing industrial production in OECD countries is hitting emerging economies more severely, leading us to make further downward revisions to our forecasts for global trade and growth in 2009-10.
• GDP growth will fall sharply this year to 1.4%, but an announced fiscal boost will prevent a further deterioration. Lower spending capacity in 2010 amid still-difficult international conditions, will cause growth to slow to just 1%.
• Lower commodity prices will ease inflationary pressure in 2009, but an expansionary fiscal policy will keep annual average inflation at 7.4%, curbing household incomes and impairing manufacturing competitiveness.
• A sharp fall in export earnings in January and lower forecast prices for Bolivias main exports have prompted us to lower our current-account forecast to surpluses of 0.6% and 0.9% of GDP in 2009 and 2010, respectively.

Monthly review

• Recent poll findings from Ipsos Apoyo Opinion y Mercado show that MrMorales's approval ratings fell to 54% in February from 61% in November.
• Pressure for electoral reform has been reinforced by an EU investigation into recent voting that calls for strengthening balloting procedures and for the introduction of a new voter-registration system before a new ballot is held.
• Concern from private sector business groups regarding the competitiveness of the exchange rate, which has been maintained at Bs7.07:US$1 since last October, increased in March.
• Preliminary figures for January 2009 show that export earnings were down by 32.5% year on year. The sector suffering the greatest fall in value terms was hydrocarbons, which declined by 31.7% to US$177m in the month.
• Data from the Central Bank show the marked rise in the pace of money supply growth over the past two years tailed off sharply in the fourth quarter of 2008, a trend that continued in January 2009 (the latest data available).

Source: Country Report

This report covers the following industry codes:
SIC Code: 1
NAICS Code: 11