Country Report Bolivia June 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 in October 2008 will hit manufacturing and exports. Bilateral relations are thawing, but a change of stance on trade in the short term seems unlikely.
• Government plans to use savings to boost spending, coupled with falling revenue from extractive industries, will lead to fiscal deficits of 3.5% of GDP in 2009 and 2% in 2010.
• Economic deterioration in Bolivia's main export marketsBrazil, the US, Japan and Argentinawill hit trade and economic growth in the outlook period.
• Real GDP growth will fall sharply this year, to 1%, as exports and investment contract. Any rebound in export demand in 2010 will be offset by lower spending capacity, maintaining growth at 1%.
• Lower commodity prices and declining consumer demand will ease inflationary pressure in 2009, although a lax fiscal policy and higher import prices will raise its average from 5.1% in 2009 to 7.8% in 2010.
• A sharp fall in export earnings and an expected decline in remittances will lead to a marked reduction in the current-account surplus to 2% of GDP in 2009, before it recovers slightly to 2.3% in 2010 on rising exports.

Monthly review

• Investigations into a fledgling paramilitary group has targeted prominent Santa Cruz business and political leaders, although no legal evidence has yet linked any of them to the group or alleged plot to assassinate Mr Morales.
• After dipping sharply in March to 49%, its lowest level since he came to power, Mr Morales's approval rating has risen again in April to 53%. @BULLET=The government has announced it will raise import tariffs from 20% to 35% on a range of 300 finished textile products in June in a bid to protect national clothing and textile manufacturers from foreign competition.
• Monthly inflation has fallen for three consecutive months, as food and import prices have declined steadily, resulting in a sharp reduction in annual inflation from 11% in January to 5.3% in April.
• Recently released trade figures show that export earnings were down 28.8% year on year during the first four months of 2009. The import bill was also down slightly, although the trade surplus still declined by 72%.

This report covers the following industry codes:
SIC Code: 22
NAICS Code: 313