• “Celebrating Growth, Sustaining Recovery”

Belize Budget Presentation For Fiscal Year 2011/2012

The Statistical Institute of Belize reported that GDP grew by 2.4% and this growth
 was underpinned by expansions in services, utilities, sugarcane, non-traditional
 crops and livestock. There was a sizeable increase in the domestic capacity for
 electricity generation as the hydroelectric facility at Vaca Dam and the bagasse
 cogeneration (BELCOGEN) plant were brought fully online.

The Institute also reported an upswing in Tourism due to respective increases in
 stay-over and cruise ship  visitors of 1.4% and  8.4%, boosted activities in
“Hotels and Restaurants”, “Transport and Communications” and “Wholesale and Retail
 Trade”.
Source: Government of Belize

• Budget Presentation For Fiscal Year 2010/2011
  “Recovery Today, Prosperity Tomorrow”

Economic Developments in Belize - 2009
With contagion from global crisis being transmitted to us through trade and investment channels, the Statistical Institute of Belize reports that the Belizean economy contracted by 0.8% during 2009. The largest declines occurred in "Hotels & Restaurants‟ and „Wholesale & Retail  Trade‟ activities, following a sharp contraction in tourist arrivals, Overnight tourist arrivals declined for the second consecutive year, though, on the upside, cruise ship disembarkations increased by 18.1%.

Putting another damper on growth in Belize were the lingering effects of the 2008  floods. The result was lackluster performance by most of the major export crops  and a decline in overall agricultural production during 2009.

Projections for 2010
As regards the real economy, preliminary projections for 2010 indicate a rebound  in GDP growth of about 1.5%, with the Central Bank allowing for the possibility of even 2%......
source: Government of Belize

• Agriculture

Agriculture currently provides some 71% of the country's total foreign exchange  earnings, and employs approximately 29% of the total labour force. Although about 1,998,230 acres or 38% of the total land area are considered potentially suitable for agricultural use, only perhaps 10 to 15% is in use in  any one year. About half of this is under pasture, with the remainder in a variety of permanent and annual crops.

 The traditional system of "milpa"  (shifting cultivation) involves the annual clearing of new land for crop production, however, there is an increasing number of farmers making permanent
use of cleared land by mechanical means. A tax is levied on the unimproved "value" of the land.
source: Embassy of Belize 

• Belize: WB Announces New Country Partnership Strategy

Washington, September 8, 2011 — The World Bank Board of Directors today endorsed
 the Belize Country Partnership Strategy for the next four years. The strategy supports the country’s efforts to adopt a sustainable natural resource-based  economic model, while enhancing Belize’s resilience to climate change and natural  hazards......
source: World Bank

• General Trends

-  According to ECLAC's flagship report Economic Survey of Latin America and the Caribbean 2009-2010, The continued impact of the floods of 2008 and the contagion from recessionary conditions in major markets led to a retreat from sound growth in 2008 (3.8%) to no growth (0%) in 2009. Nevertheless, this leaves Belize as one of the better performers in the Caribbean, given the pervasive downturn in the region.
The primary goods and services sectors took the brunt of the impact, with contractions of 2.4% and 1.4%, respectively. Owing to lower fuel and food prices  and sluggish internal demand, Belize experienced deflation of 0.4% in 2009 following price rises of 4.4% in 2008.

-  In ECLAC's Economic Survey of the Caribbean 2008-2009,  growth recovered in 2008, to 2.1% from 1.2% in 2007, despite the slowdown in global demand occasioned by the financial and economic crisis and the dampening effects of flood damage in 2008. The pick up in activity was driven by robust construction activity and a substantial rise in petroleum output, which more than offset the downturn in agriculture and tourism.

Inflation spiked to 6.4%, the highest rate in the last 12 years and was propelled by an upsurge in food and fuel prices during the first three quarters of the year. Unemployment declined to 8.2% from 8.5% in the previous year, as job growth was buoyed by improved activity.
source: ECLAC

• Economic Overview 2009

The Belizean economy contracted by 2.2% in the first quarter of 2009 as a result of reduced activity in wholesale & retail trade, hotels & restaurants, and agriculture. The wholesale & retail subsector registered the largest decline of 14.0% primarily due to the falloff in commercial free zone trade while declines in stay over tourist arrivals and cruise ship disembarkations contributed to a 10.7% contraction in the hotel & restaurant subsector.

Production downturns in banana and citrus were the main cause of the 6.8% contraction in ‘agriculture, hunting and forestry’. On the positive side, there was increased economic activity in construction, manufacturing, electricity and water, and other private sector services.

source: Central Bank of Belize Quarterly Review. March 2009

• Economic Survey of the Caribbean 2007-2008

The survey provides an overview of the economic performance of countries of the Caribbean Development and Cooperation Committee (CDCC) for the year 2007 and their outlook for 2008. The last chapter presents country briefs with the main macroeconomic developments in 2007 and the outlook for 2008.

Growth momentum slowed in Belize during 2007, following more dynamic activity in the two previous years. Real output increased by 1.6%, following growth of 5.3% in 2006. Growth was compressed by lower output and exports in the critical agriculture sector, which was buffeted by Hurricane Dean, while value added in services picked up.

Despite the slowdown in activity and reflecting the strong pass-through of import prices, inflation rose to 4.1%, relative to 3.0% in 2006. Reflecting the hike in international oil prices and poorer harvests in various countries, inflation was largely driven by higher fuel and food prices. Unemployment posted a decline for the fourth consecutive year, as primary, secondary and tertiary activity all registered high job growth.

External accounts weakened in 2007, as a consequence of reduced commodity trade volumes due to hurricane damage and insect infestation in sugar and bananas and reduced marine and other exports.

• EIU 2008 Country Profile for Belize

The economy has traditionally been oriented towards agriculture. However, together with forestry and fishing, its share in total GDP has declined in recent years, to 10.6% of GDP in 2007 from 14.4% of GDP in 2003, according to data from the Central Statistical Office. Sugar has traditionally been the single largest export earner, bringing in almost 41% of total domestic export earnings in 1990, but only 17.5% in 2007, by which time foreign sales of citrus juices and crude oil were of greater importance, representing, respectively, 21% and 25% of total value of export earnings. Citrus fruits are processed into concentrated juice, which enjoys duty-free and quota-free access to the US market under the Caribbean Trade Partnership, as well as duty-free access to the EU. With preferential access to markets for sugar, citrus and banana exports likely to be phased out in the medium term, efforts are being made to diversify into nontraditional crops such as papaya, soybeans, cashews and chilli peppers, and to develop further the marine products sector.

The manufacturing sector has shown gradual growth in recent years and accounted for 11.4% of GDP in 2007, up from 7.8% of GDP in 2003. The sector  has traditionally centred on agricultural processing and food and beverage production.

The services sector grew in importance during the 1990s and has been by far the largest recent contributor to economic growth. The contribution from all services to GDP was 61.7% in 2007, up from 56.7% of GDP a decade earlier. Within the services sector, tourism is one of the fastest growing subsectors. The share of GDP of hotels and restaurants has increased from an average of 3.2% in
the 1990s to 4.6% in 2007. Transport and communications is also an important contributor to overall GDP, and has grown strongly over the past five years. Commerce is boosted by a vibrant commercial free zone, the Corozal Free Zone, near the border with Mexico, which focuses on retail of imported merchandise and fuel to the Mexican market and casino gambling.

Economic Performance
Belize's economic performance is highly uneven, with GDP growth recording marked fluctuations from one year to the next. Between 1995 and 2007 the economy grew by a lowly annual average of 2.4% (real GDP). However, this average growth rate masks wide fluctuations in annual growth. Economic performance has been vulnerable to both external (economic and climatic) shocks as well as erratic policymaking. In the early years of the PUP government from 1998, expansionary fiscal policy produced strong GDP growth
rates.

Annual GDP growth peaked at 12% in 2000, and again at 9.3% in 2003 Another supportive factor was the expansion in tourism, fishing and aquaculture, and in some manufacturing activities. The start of a small oil industry in 2006 resulted in growth of 5.3% that year; however, expansion slowed to 1.6% in 2007 as oil production reached a plateau. With the currency pegged to the US dollar, the rate of inflation has remained lower and relatively stable compared with other regional economies with more flexible exchange rates, averaging just 0.8% in 1998-2003. Inflation has trended steadily upwards since then, to a peak of 4.2% in 2006, as a result of stronger private consumption demand on the back of an improving economy, as well as increases in water charges and government taxes.

Tourism
The number of hotel rooms increased from 3,708 in 1995 to 5,789 in 2006; employment in the sector has also risen steadily, reaching 8,878 jobs in 2006. Hotel occupancy averaged 41% in 2002-06. Arrivals by cruise ship, which had dwindled to only a few passengers in 1996, have increased sharply since late 2001 with the opening of a cruise-ship facility in Belize City. As a result, arrivals totalled a peak of 851,436 in 2004 from 48,116 in 2001, falling back to 560,478 in 2007, as cruise lines shortened their routes in response to higher fuel prices.

In 1996 Belize ratified the Mundo Maya agreement with Guatemala, Mexico, Honduras and El Salvador for co-operation on the management of Mayan archaeological sites and related tourism promotion. The sector has strengthened since 1997, owing to an intensive marketing campaign in the US and a US$11.4m loan from the Inter-American Development Bank (IDB) for technical assistance, human resource development and the restoration of archaeological sites.

According to the Central Bank of Belize, stopover tourist arrivals reached an all- time high of 241,575 in 2007, up by 1.6% on the previous year. The US was the dominant market, with 60.7% of arrivals, compared with 13,6% from Europe, 6.4% from Canada, and much of the remainder from Guatemala and Mexico.
source: Economist Intelligence Unit (EIU)

• Overall Performance

Belize’s economic growth decelerated in the years of 2005 and 2006. Owed to the tightening of monetary and fiscal policies, this economic protraction was intentionally set, as the country implemented a stabilization policy in 2005 instead of their usual expansionary type.

Authorities tightened liquidity by channeling social security deposits; where fiscal discipline was maintained through lower interest payments and cuts in capital expenditure. Current account management also helped decrease the external account deficit to 8 ½ % of GDP in 2006 compared to the 14 % in 2005. Tourism receipts also seemed to pick up, as this sector registered a stronger value than last year’s.SourceIMF Executive Board Concludes 2006 Article IV Consultation with Belize

• Fiscal and Current Account Situation

Depletion of fiscal deficits in 2005 and 2006 could pose some harm to the Belizean economy in 2007. Reason being, the low taxes and cheap credit provided by the private sector in 1999 perpetuated large fiscal and current account imbalances, thus creating financial dependence on external creditors. The economy must now look at servicing financial gaps within both the fiscal and Balance of Payments sectors. The IMF’s staff appraisal [Belize: 2006 Article IV Consultation—Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Belize] states : “The medium-term framework would need to include a combination of additional fiscal effort, continued monetary restraint, bilateral and multilateral financing, and relief from the envisaged debt operation. The latter is a key element in the government’s plan to put public finances on a sustainable basis, and the authorities should seek to reach a cooperative agreement with private creditors.

• Public Debt

(Source: Belize: 2006 Article IV Consultation—Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Belize]

Stabilization policies created a substantial amount of positive results for the Belizean economy, yet the worrisome task of servicing the country’s public debt is first on the agenda for 2006/07 fiscal year.

As of June 30, 2006, Belize’s public and publicly guaranteed debt stood at 1,088 million (93.5 percent of GDP). The main structural characteristics of this debt follows:

The overwhelming majority of the public and publicly guaranteed debt is owed to external creditors and denominated in foreign currency. As of June 2006, external creditors held over 90 percent of total debt (86 percent of GDP). All external debt is foreign currency denominated and unhedged. The small amount of domestic public debt consists mainly of loans and treasury bills and notes by banks. The marginal relevance of domestic debt reflects the underdevelopment of Belize’s domestic financial markets.

Commercial creditors hold more than 60 percent of the external public debt. The remainder of the external debt is held by multilateral creditors (23 percent), mainly CDB and IADB; bilateral creditors (16 percent), mainly Taiwan Province of China; and export credit (1 percent).
source: IMF