05.06.2026
Bolivia’s economy entered 2026 in a severe macroeconomic adjustment phase after contracting in 2025. The new government faces inherited imbalances: large fiscal deficits, fuel subsidies, foreign-exchange shortages, depleted reserves, high inflation and falling living standards. Growth is expected to contract again in 2026 as fiscal consolidation, higher fuel prices and policy uncertainty weigh on domestic demand, before recovering in 2027 if stabilisation and private-investment reforms gain traction. Inflation is projected to remain very high in 2026, while fiscal and external buffers remain weak. Public debt is high and market access remains limited, making credible fiscal consolidation essential.
| Indicators | 2025 | 2026 | 2027 |
|---|---|---|---|
| GDP growth (%, yoy) | -2.1 | -3.2 | 4.0 |
| Inflation (%, yoy) | 19.5 | 21.2 | 16.0 |
| Employment rate (% of working-age population, 15+) | 77.4 | 77.4 | 77.4 |
| Upper-middle-income poverty rate ($8.30, 2021 PPP, %) | 19.5 | 20.6 | 20.7 |
| Fiscal balance (% of GDP) | -11.1 | -9.2 | -8.3 |
| Gross public debt (% of GDP) | 90.4 | 89.9 | 84.9 |
| Current account balance (% of GDP) | -2.0 | -2.7 | -2.3 |
Economy contracts amid shortages and weak investment
Bolivia’s real GDP is estimated to have contracted by 2.1% in 2025, following a 1.1% contraction in 2024. The downturn was driven by falling investment, weak domestic demand, fuel and goods shortages, declining hydrocarbon production and foreign-exchange scarcity. Price controls and export restrictions failed to contain inflation and added to distortions in the economy.
GDP is projected to contract further by 3.2% in 2026, as subsidy cuts, higher fuel prices, fiscal consolidation and policy uncertainty weigh on consumption and investment. A recovery of 4.0% is projected for 2027, but this depends on credible stabilisation, improved confidence and reforms that support private investment.
Inflation remains very high
Inflation rose sharply in 2025, reaching an estimated annual average of 19.5%, with end-year inflation significantly higher. The main drivers were foreign-exchange shortages, fuel and goods shortages, price distortions, a widening parallel exchange-rate premium and the monetisation of fiscal pressures.
Inflation is projected to rise further to 21.2% in 2026 before easing to 16.0% in 2027. The disinflation path will depend on exchange-rate normalisation, fuel-price adjustment, fiscal consolidation and the rebuilding of confidence. Without credible policy reforms, inflation could remain entrenched and continue eroding real incomes.
Fiscal adjustment is urgent
The fiscal deficit widened to an estimated 11.1% of GDP in 2025, driven by declining gas revenues, high public spending and fuel subsidies. With limited access to international capital markets and constrained external financing, the government relied heavily on domestic sources, including the central bank and the state pension fund.
The deficit is projected to narrow to 9.2% of GDP in 2026 and 8.3% in 2027, but these levels remain very high. Public debt rose to 90.4% of GDP in 2025 and is projected to remain close to 90% in 2026 before declining to 84.9% in 2027. Fiscal consolidation will require fuel-subsidy reform, stronger revenue mobilisation, better public investment prioritisation and reduced reliance on domestic financing.
External buffers remain weak
The current account deficit narrowed to 2.0% of GDP in 2025, but this mainly reflected import compression caused by foreign-exchange shortages and weak domestic demand. Hydrocarbon exports remained weak, while mineral and manufacturing exports benefited from higher prices rather than strong volume growth.
The current account deficit is projected to widen to 2.7% of GDP in 2026 before narrowing slightly to 2.3% in 2027. Usable foreign-exchange reserves remain critically low, and gold holdings form a large share of official reserves. The external outlook remains vulnerable to fuel import costs, declining gas exports, limited FDI, debt-service payments and delays in lithium or gas investment.
Overall outlook
Bolivia’s outlook is fragile and highly dependent on policy credibility. The economy is expected to contract again in 2026 before recovering in 2027, but inflation, fiscal deficits, high debt and low reserves will remain major constraints. The main challenge is to stabilise the economy without worsening poverty and social tensions. A durable recovery will require credible fiscal consolidation, fuel-subsidy reform, exchange-rate and price normalisation, stronger social protection, improved business conditions and reforms that attract private investment beyond hydrocarbons.
Sources:
World Bank, Bolivia Macro Poverty Outlook, April 2026.
International Monetary Fund, Bolivia: 2025 Article IV Consultation and Staff Report, June 2025.
International Monetary Fund, World Economic Outlook, April 2026.
Central Bank of Bolivia, Monetary and External Sector Statistics, 2025–2026.
Ministry of Economy and Public Finance of Bolivia, Fiscal and Public Debt Data, 2025–2026.
