Andean Group - May 2009 (ISSN 1741-4466)

The economy and finance minister, Luis Arce, said that the economy should grow in 2009 and that the country would be one of the few in 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 rate could be higher. The government had based the 2009 budget on an average oil price of US$73 a barrel. In February the oil price 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 governments' original forecast for 2009 had been for growth of 4.5% and inflation of around 6%.

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%.

Inflation:  In April the consumer price index fell by 0.43%, much the same as the 0.49% fall in the index in March. For the first four months of 2009, the index has fallen by 0.64%. This means that inflation in the 12 months to April was 5.32% about half the rate for calendar 2008, which was 11.85%.