Bolivia: Economic Outline

Economic Indicators

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Though rich in mineral resources - with the second-largest reserves of natural gas in South America - Bolivia is one of the region's poorest countries. Bolivia also lacks economic diversification, making the country's economic growth largely supported by natural gas exports. In 2021, the country registered an estimated GDP growth rate of 5%, mainly driven by private and public consumption, as well as external demand (IMF). The economy is expected to continue to pick up in the coming years, albeit at a slower pace, with the IMF predicting a GDP growth of 4% for 2022 and 3.7% for 2023.

The Bolivian economy seems rather strong in appearance: a sustained growth, an inflation under control (1.3% in 2021), and large currency reserves. However, Bolivia is dependent on oil prices, and the large fall in gas export revenue has affected public accounts: the budget and current deficits are increasing. The expansionary budget also contributed to worsening public budget, which was negative by 9.7% in 2021. The financing of the deficit is expected to increasingly depend on multilateral donors, such as the IMF, the Andean Development Cooperation, and the World Bank. In 2021, the current account deficit reached 2.2%, and it should slightly increase to 2.8% in 2022 and 3.2% in 2023. Overcoming the dependency on mineral resources, reforming justice, modernising infrastructure, the increase in the competitiveness of the labour force, combating insecurity and addressing the problem of violence against women are the country's main challenges in the long run. In 2021, the government continued implementing measures in response to the economic crisis resulting from the COVID-19 pandemic that included the deferral of some tax payments, the creation of a USD 219 million fund to support micro, small, and medium businesses; and increased social spending to aid eligible individuals, such as those who receive the universal transfer, mothers, people with disabilities and citizens over the age of 18 who do not receive any type of public or private salary. Overall, the economy has been showing significant signs of recovery thanks to the measures adopted by the government in light of the pandemic.

In spite of a sharp fall in poverty in the last decade, nearly 40% of Bolivians still live below the poverty line. The country is also marked by inequalities in the distribution of its wealth and a strong informal sector. However, the unemployment rate is among the lowest in the region, as it stood at an estimated 6% in 2021. Moreover, the Bolivian justice system has been plagued by corruption, delays, and political interference. Additionally, impunity for violent crime and human rights violations remains a serious problem.

Monetary Indicators	2016	2017	2018	2019	2020
Boliviano (BOB) - Average Annual Exchange Rate For 1 GHS	1.73	1.59	1.51	1.33	1.23

Source: World Bank - Latest available data.

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Latest Update: April 2023