Country Report Bolivia January 2009

Outlook for 2009-10

• A referendum on January 25th to decide on the adoption of a new constitution will, if successful, set in motion an early election process, with a presidential and legislative election due to take place on December 6th 2009.
• Mr Morales will be re-elected but opposition candidates for Congress will do well in eastern regions. Relations between the government and its opponents will remain tense and civil disorder could increase, especially in 2009.
• The suspension of Bolivia's preferential trade access to the US under ATPDEA will hit manufacturing and exports. The Economist Intelligence Unit does not expect action to reinstate Bolivia's preferential status until at least mid-2009.
• After a record surplus in 2008, a decline in hydrocarbons and mining revenue, in the context of global economic recession, will result in NFPS fiscal deficits of 1.8% and 1.5% of GDP in 2009 and 2010 respectively.
• We now forecast that real GDP growth will fall from an estimated 6.0% in 2008 to 1.2% in 2009 (previously 2.6%) and 2.8% in 2010, with both domestic and external demand declining as a result of the global economic recession.
• 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.
• We now expect that the current-account surplus will fall from an estimated 12% of GDP in 2008 to 3.2% in both 2009 (previously 5.4%) and 2010 (previously 4.7%), as export earnings and remittances decline sharply.

Monthly review

• Political debate over the past month has been focused on the campaigns for and against the proposed new constitution in advance of a national referendum. Polls still show more than 60% of voters favour its approval.
• Brazil has decided to cut natural gas imports from Bolivia by 29% in 2009. An increase in gas imports by Argentina will partly compensate for the loss.
• Preliminary fiscal accounts data for January-November 2008 show that revenue growth outpaced a strong expansion in public spending, resulting in a further widening of the NFPS surplus to a remarkable 8.2% of GDP.
• Real GDP expanded by 6.5% year on year in the first nine months of 2008, roughly the same pace as during January-June. Private consumption grew the fastest, at 6.3%, and accounted for the largest share of growth.
• Moderating price increases in October and November helped bring annual inflation to 11.85% in December, slightly above the 11.73% year-end rate for 2007 but well down from the peak of 17.3% reached in June 2008.

Source: Country Report

This report covers the following industry codes:
SIC Code: 10;70;60
NAICS Code: 212;72;52

This report covers the following industry codes:
SIC Code: 10;70;60
NAICS Code: 212;72;52