Facing an economic challenge as the only Latin American country with “low-middle” income.
Despite the boom in the hydrocarbon industry, Bolivia is still classified as “lower middle income” according to the World Bank. This raises the question of why the country has not been able to reach higher income levels despite its gas industry revenue.
A Challenging Economic Landscape: Why Does Bolivia Remain “Lower Middle Income”?
Since 1987, Bolivia has struggled to move up to the levels of “upper middle income” or “high income” like other South American countries, even with the significant income from the gas industry. The growth experienced between 2006 and 2014 was temporary and did not lead to sustained development, highlighting the challenges Bolivia faces in achieving economic stability.
Decline in the Gas Industry and Its Consequences
The decline in Bolivia’s gas industry since 2015 has had a major impact on the economy, with hydrocarbon revenues dropping drastically. This decline has exposed the country’s heavy dependence on this sector, creating economic challenges that need to be addressed.
The Current Crisis: Inflation and Dollar Shortage
In addition to the gas industry decline, Bolivia is currently facing an economic crisis marked by high inflation and a shortage of dollars. This crisis has led to a parallel currency market and difficulties in making imports, further straining the economy and highlighting the need for urgent measures to address these issues.
The lack of economic diversification is a key challenge for Bolivia, as the country must find ways to reduce its dependence on natural resources and develop alternative sectors for long-term economic stability. As Bolivia navigates these challenges amidst political tensions and upcoming elections, it is crucial to implement measures that can improve the country’s economic classification and ensure a more stable future.
