Country Report Bolivia September 2009

Summary

General elections are set for December 6th 2009 with Evo? Morales expected to be re-elected as president. Opposition candidates for Congress will do well in eastern regions, but will struggle to maintain a Senate majority.
Bolivian foreign policy will continue to follow the populist example of the Venezuelan president, Hugo Chavez. Ideological tensions will impair trade and investment links with the US and other countries
Government plans to use gas windfall savings to support spending, coupled with weaker revenue from extractive industries, will lead to fiscal deficits of 2% of GDP in 2009 and 2.2% in 2010, the first deficits since 2006.
Official results suggest that Bolivia has been spared the worst of the global economic downturn, but the still-weak external environment and a lack of investment in productive sectors, will hit trade and economic growth.
Strong fiscal spending and an increase in money flows related to drug production appear to have prevented a recession in 2009. However, tighter fiscal conditions mean that GDP growth will remain weak in 2010 and 2011.
Weaker import prices and declining consumer demand will ease inflationary pressure in 2009, although a lax fiscal policy and higher fuel prices will raise average inflation from 3.4% in 2009 to 4% in 2010.
Weaker global demand and lower inflows from export earnings and remittances will sharply reduce the robust current-account surplus from 12.1% of GDP in 2008 to 4.1% in 2009 and 2010.

The political focus in Bolivia is now firmly fixed on presidential and legislative elections due to be held on December 6th. Mr Morales remains broadly popular but the opposition is attempting to build a united coalition.
A biometric re-registration of the roughly 4m eligible voters began in early August, but will struggle to meet a mid-October deadline.
Worries over continued weak levels of investment and production in the key hydrocarbons sector prompted the energy ministry to threaten to begin rigidly enforcing investment conditions in private oil company contracts.
A combination of weaker demand and international prices has reduced Bolivia's earnings from natural gas exports by 25.6% year on year to US$1bn in January-June.
Announcements by the Ministry of Finance indicate that real GDP has risen by around 3% in January-June, an increase from the modest 2.1% growth during the first quarter of 2009.

Source: Country Report

This report covers the following industry codes:
SIC Code: 48;60;22
NAICS Code: 517;52;313