Bolivia Annual Inflation Forecasts Lowered to Just 3.5%

Forecasts published Wednesday show Bolivia’s annual inflation rate decreased from 4 percent to just 3.5 percent, placing it among the lowest in the region. However, GDP growth forecasts remain high at 4.7 percent, leading South America for another year running. 

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Bolivia’s leftist government has been praised for ensuring economic stability, following Central Bank forecasts that lowered inflation forecasts to 3.5 percent annually. 

"Low inflation promotes the efficient use of productive resources and reduces uncertainty … low and controlled inflation is an indicator of macroeconomic stability,” said Central Bank economist Luis Ballivian. 

Bolivia’s low inflation is due to a combination of price controls on basic goods and state intervention, Economic analyst Guillermo Pereria said. Although the majority are made by currency exchange markets, it has primarily been the rise in agricultural production and food sovereignty which lowered Bolivia’s dependency on expensive imports and its vulnerability to fluctuations in the global market. 

The rise in agricultural production follows Evo Morales’ land reform, which redistributed millions of hectares to Indigenous campesinos. It invested heavily in modern machinery and development for rural communities. An example of the investments include the announcement in July that the government was donating $6 million worth of tractors to be used communally by rural communities near the Andean town of Viacha.

Bolivia’s inflation figures are in stark contrast to neighboring Argentina. There, following four years of neoliberal reform, inflation has spiralled out of control, hitting nearly 60 percent annually, along with negative growth and rising unemployment.

The ruling 'Movement Towards Socialism' party will be hoping that a strong economy will be enough to deliver reelection, with electoral campaigns heating up ahead of the October presidential elections.