Hit by low commodity prices

Download the full report
including graphs and images
euler hermes
euler hermes

General Information

GDP USD34.176bn (World ranking 96, World Bank 2014)
Population 10.85mn (World ranking 80, World Bank 2014)
Form of state Republic / Social Unitarian State
Head of government Evo MORALES (MAS)
Next elections 2019, presidential and legislative

Country Rating D4euler hermes


  • Valuable natural resources, especially hydrocarbons
  • Improving currency autonomy
  • Surplus in current account and fiscal balances
  • Increasing capacity to weather external shocks


  • High dependency on the commodity sector (mainly gas)
  • Declining but still high inequality and elevated level of poverty
  • Weak business environment
  • Threat of (re)nationalization, expropriation
  • Enclosed geographic position

Economic Overview

Low commodity prices to weigh on growth

The landlocked economy depends on mineral and hydrocarbon exports to a large extent. Amid a protracted period of low commodity prices and poor economic performance of main trade partners (recession in Argentina and Brazil, slowing growth in China), growth is set to dip below +4% in coming years. The average rate over 2010-2014 was +5.5%. Nonetheless, Bolivia should continue to outperform the regional average


State interventionism undermines private investment and generates rigidities

The government conducted a prudent policy during the boom in commodity prices. It safeguarded a sizeable share of export revenues. However, the plunge in gas and oil prices has led to a strong deterioration of fiscal and external accounts. These are not expected to narrow much in the coming years. 

Indeed, while fiscal and export revenues are set to recover at a modest pace, public spending should remain buoyant. This will support domestic demand. Imports - notably of capital goods - will remain strong due to public development projects.

Accordingly, the public and external debt will rise at a steady pace but remain at manageable levels. FX reserves are comfortable and cover around 12 months of imports. Yet these have tumbled over the last months to USD11.6bn. The June 2016 figure is -11% lower than a year ago. 

Inflation is anchored to the most part by a fixed exchange rate regime. But the emergence of problematic inflation rates cannot be ruled out in the medium term as a price-wage spiral remains a risk. The government decided to increase the minimum wage by 9% in April 2016, after +15% in 2015. 

Trading with Bolivia remains problematic. State interventionism undermines private investment and generates rigidities. According to the World Bank’s Doing Business 2016 survey, Bolivia ranks 157th out of 189 countries, with particular shortcomings in registering property, paying taxes, and protecting investors. The risk of expropriation is considerable. In the past few years, several companies have been (re)nationalized, with a focus on the hydrocarbons, the electricity, and the telecommunication sectors. 

President Evo Morales, who continues to enjoy high popularity rates, was re-elected in October 2014 for a third 5-year term. He has been in power since 2009. However, in February 2016, he lost a referendum aimed at allowing him to hold office indefinitely. Next elections will be held in 2019.

Last review: 09/27/2016