Country risk reference rating: level 8 (8/9)
Country Risk Outlook: Stable
Economic risks
Bolivia is a major exporter of mineral products in Latin America. Its industry is underdeveloped. Livestock products can meet most of the domestic demand, and a large amount of food needs to be imported. The Morales government abandoned neoliberal economic policies, strengthened state intervention in the economy, nationalized oil and gas resources, increased natural gas export prices, and promoted land reform. The macroeconomic situation has improved. Bolivia’s good economic situation mainly benefits from the following three aspects: First, the regulated financial system and huge international reserves. Second, international commodity market prices have risen, exports have increased, and current account surpluses have been large. Third, affected by imported inflation, the inflation rate has fluctuated greatly since 2009, but the money supply has been stable, and stable monetary policy has effectively mitigated the impact of imported inflation on the real economy. Based on the above three characteristics, Bolivia has maintained basic macroeconomic stability in recent years, and its economic performance is basically good. In 2012, the GDP growth rate was 4.6%, and the GDP scale reached 26.2 billion US dollars.
Bilateral trade
In 2012, the bilateral trade volume between China and Bolivia was US$676 million. Among them, China’s exports in 2012 were US$353 million, a year-on-year decrease of 8.33%; imports were US$322 million, a year-on-year increase of 17.54%; China had a surplus of US$32 million. China has become Bolivia’s tenth largest export destination and third largest import source. In recent years, there have been obvious ups and downs in the development of trade between the two countries. For example, most indicators of bilateral trade fell sharply in 2009, and then rose sharply from 2009 to 2011. The results of surplus and deficit are also variable, indicating that the market demands of the two sides have not reached balance. In the commodity structure of bilateral trade, China mainly imports mineral sand, wood and wood products, leather and leather products from Bolivia. Bolivia imports a wide variety of commodities from China. In 2012, the number of imported products was 4,040 categories, which was higher than that in 2011. 118 categories were added, mainly electromechanical products, hardware products, textiles, footwear and clothing, etc. The trade between the two countries is highly complementary and has great potential for development.
Business environment
In order to encourage foreign capital to enter the domestic market, Bolivia has formulated corresponding laws and policies: to encourage and protect domestic and foreign investment, to recognize the equal treatment of foreign investors and domestic investors in terms of rights, obligations and guarantees; capital freedom Inward and outward remittances; dividends, technology transfer fees, and remuneration can be remitted freely, and there are no restrictions on other commercial loans. Bolivia regards oil, gas and mining as pillar industries for the country’s economic development in the future, and hopes that foreign investment will enter. However, it has previously implemented unilateral nationalization of the above two industries, and the future policy direction is unclear. Currently, many Western countries have a wait-and-see attitude. Bolivian law protects asset ownership and intellectual property rights, but it also stipulates that once private assets conflict with social purposes, the government has the right to expropriate them and provide necessary compensation in accordance with the law. In addition, corruption in Bolivia is relatively serious, and access to the public through political favors Executive branch employees believe that public affairs are an extension of their private property, corruption among state officials continues to emerge, and the government suffers from bureaucracy and inefficiency.
Overall risk assessment
Bolivia is rich in resources and has good economic development conditions. Its macroeconomic performance has been stable in recent years. Bolivia’s economic growth slowed down in 2012, slightly lower than in 2011, but major economic indicators improved. The sustained growth of the economy is due to the increase in natural gas production, improvement in employment indicators, real wage growth and public subsidy policies, which have led to an increase in personal consumption and the continuous expansion of domestic demand. However, Bolivia’s economic development is relatively dependent on the external market, has a heavy foreign debt burden, is susceptible to changes in international trade conditions, and has a relatively fragile economic structure.
Based on the analysis and assessment of the current overall situation, Bolivia’s national risk reference rating is 8 (8/9), with a significant national risk level and a stable national risk outlook. (Issuing agency: China Export and Credit Insurance Corporation)
