Country Report Bolivia December 2008

Summary

A national referendum on the new constitution, which was approved by Congress after lengthy debate in October, will go to a vote on January 25th 2009. Fresh general elections are then expected to take place in December.
As both the government and opposition campaign ahead of voting in January and December 2009, political relations will be tense and could reignite violent confrontations between each side's supporters.
After recording a record surplus in 2008, a decline in hydrocarbons revenue and an increase in spending will result in fiscal deficits of 1.6% and 1% of GDP in 2009 and 2010, respectively.
We estimate real GDP growth will be 6.0% in 2008, driven mainly by private consumption growth and a surge in commodity exports, before slowing to 2.6% in 2009 and 3.3% in 2010 as both domestic and external demand decline.
Lower commodity prices will ease inflationary pressure in 2009; however, an expansionary fiscal policy will keep annual average inflation close to 8%, curbing household incomes and impairing manufacturing competitiveness.
Bolivia's preferential trade access to the US under ATPDEA will be officially suspended on December 15th. The Economist Intelligence Unit does not expect action to reinstate Bolivia's preferential status until at least mid-2009.
Based on strong, but declining, trade and current transfer surpluses, we expect that the current-account surplus will fall from an estimated 11.4% of GDP in 2008 to 5.4% in 2009 and 4.7% in 2010.

A recent government survey puts public support for the new constitution at 62%. The opposition has split since the congressional approval of the draft constitution and so far has failed to mount a unified "No" campaign.
In a surprise announcement, the vice-president, Alvaro Garcia Linera, has said he will not stand again at the next election (December 2009), leaving MrMorales to choose another running mate.
Firm revenue from natural gas and mineral exports has bolstered the public finances in January-September, despite an increase in spending. The NFPS surplus reached a robust Bs8.9bn (7.3% of GDP) in the period.
Official data for mineral production show strong increases in output (led by zinc, silver and lead) and in value, mainly owing to strong global prices during the period and the San Cristobal mine, which came on stream in late 2007.
The current-account surplus reached US$1.6bn in January-September' mainly on the back of increasing trade and current transfers surpluses.

This report covers the following industry codes:
SIC Code: 60;10
NAICS Code: 52;212