BOLIVIA: Too bullish?
The economy and finance minister, Luis Arce, said that the economy should grow in 2009 and that Bolivia would be one of the few countries in the world that would not fall into a recession.
Arce expects growth of around 4% in 2009, though if oil prices continue to rise, he implied, the growth rate could be higher. The government had based the 2009 budget on an average oil price of US$73 a barrel. In February the price of oil hit US$33 but was nudging US$61 a barrel by the end of May. Arce said that the government had factored in a 17% fall in hydrocarbon revenues in 2009, but now reckoned that this would be a worst case scenario. In 2008 the economy grew by 6.1%, though inflation was almost 12%. The government's original forecast for 2009 had been for growth of 4.5% and inflation of around 6%.
Arce's forecasts look optimistic. Exports are suffering from the weakness of the price of oil. In the first four months of 2009, total export receipts were down by 29%, (or US$630m in cash terms) year-on-year, at US$1.56bn. Hydrocarbons exports were down 33% at US$731m. Thanks to its demand for gas, Brazil is Bolivia's most important export market. It spent US$518m on gas and US$531m on Bolivian products in total during this period.
Brazil's appetite for Bolivian gas is falling as industrial demand weakens. In the first four months of 2009, industrial demand for gas fell by 28%. Overall Brazil's demand for gas fell by 35%. In the first four months, exports of hydrocarbons fell by US$356m. This category still accounted for 46% of total exports. The next biggest category was manufactured products (24%), followed by minerals (23%). Agricultural products accounted for 4% of total exports.
In the first four months Bolivia ran a trade surplus of US$210m, down from US$760m in the first four months of 2008. What is encouraging for Arce's forecast is that imports have barely skipped a beat. In the first four months of 2009 they fell by 6% to US$1.35bn. Crucially, imports of capital goods actually increased from US$290m in the first four months of 2008 to US$311m in the first four months of 2009.
Bolivianisation: The government and the Asociación de Bancos (Asoban) agree that the replacement of the dollar with the Boliviano is helping the economy. When President Evo Morales took office in 2006, 95% of the financial sector's transactions were in dollars. Now the figure is down to 45%.
Tin: The state-owned companies Corporación Minera de Bolivia and Huanuni are investing US$40m in projects to double the country's tin production to 3,000t a day. Currently the country produces about 1,200t. In 2007, the government of President Evo Morales nationalised Vinto, a smelter owned by Glencore, and also took control of the Huanuni tin mine which was being operated by cooperatives.
Inflation: In April the consumer price index fell by 0.43%, much the same as the 0.49% fall in in March. For the first four months of 2009, the index has fallen 0.64%. This means that inflation in the 12 months to April was 5.32%, about half that of calendar 2008 (11.85%).