Friday, July 10, 2009

Evo: "Global recession. What recession?"

The financial savvy Inca Kola News played a fun game with its readers the other day asking, "Which South American country is forecast to have the highest GDP growth for 2009?" The answer:

Bolivia, pues

The Bolivian Central Bank anticipates 4% GDP growth in 2009. If you don't trust them, the IMF (critical of Evo's policies) forecasts 2.2%, while the Marxist Bolivian think tank CEDLA (critical of Evo's policies from the otherside) forecasts 2.8%.

So basically, in the mists of a global economic recession (depression?) and in a region almost entirely in the red, Bolivia's economy continues to grow. Please also note that Bolivia is managing this growth with minimal inflation. (Didn't the neoliberals claim only they could deliver such figures?)

Watch out people, or a coca-chewing socialist might do the same to your country!


mcentellas said...

4.4% GDP growth is pretty good, assuming it grows faster than population & inflation pressures. This is about the figure for some (not all) years in the 1990s. The problem was that roughly 4% growth only is "growth" if it outstrips population pressures (which in those years it didn't). Another consideration, of course, is whether that growth is equitably distributed. I agree that the Bolivian economy is growing. I'm curious to see what that means for most people, particularly common working people. The sense I get (and not just from reading the newspapers) is that unemployment & food prices are up. The most important figure, for a country like Bolivia, isn't whether GDP growth is up, but whether poverty is down. Some countries (e.g. Cuba) have been able to achieve poverty reductions even in the midst of GDP contractions.

El Duderino said...

According to the latest Bolivian government report poverty has decreased from 41% in 1996 to 32% in 2008. Certainly all of this decrease cannot be attributed to Morales´ policies but is encouraging.

mcentellas said...

Certainly the last few years (when oil/gas prices were up, other exports were up, and foreign aid was up) were good for Bolivia, economically. I'm curious to know what happens in 2009 & 2010, when the crisis slows down US/Europe/Japan consumption & aid expenditures.

My only point w/ the previous comment was that GDP growth is not everything. Most development economists look at other indicators, such as changes in the Human Development Index.

mcentellas said...

My concerns come from reports of potential job losses due to the end of ATPDEA trade preferences. Many (including government) analysts now expect the country to lose about 10,000 jobs. That's about 0.1% of the total population. That's the equivalent of 500,000 jobs in the US. Which is the number of jobs that were lost per month (on average) in the US in 2008/2009. If that ATPDEA effect is an isolated incident, it might not be disastrous (though a 0.1% total population unemployment in Bolivia is probably worse than a similar figure in the US). But if it starts a snowball, it could wipe out many of the gains of the last few years. I think it's too early to tell for sure if Evo's government is immune to the effects of the global recession or not. It's good to be optimistic. But I got a sense from lots of people (waiters, cab drivers, people on the street in general) that many were worried about the "global economic crisis" (wether that's hype or not, of course, remains to be seen).