Belize's Economic Future: Growth Or Decline?

Belize's economy is growing, with a GDP of $2.83 billion in 2022, a 16.74% increase from 2021. The country has a developing free-market economy, based primarily on tourism, agriculture, and services. Belize's economic performance is susceptible to external market changes, and it relies heavily on foreign trade with the United States as its top trading partner. The country's prospects for sustainable growth depend on maintaining environmental preservation and building economic resilience.

Belize's economy is susceptible to external market changes

The country's economy is heavily dependent on foreign trade, particularly with the United States, which accounted for 48.5% of Belize's total exports and provided 49.7% of its imports in 2000. As a small, open economy, Belize is susceptible to changes in the external environment, including fluctuations in global demand for its exports and changes in trade policies of its major partners.

Belize's trade deficit has been growing due to low export prices for sugar and bananas, and the country faces challenges in economic stability due to a lack of progress in reining in spending. The Belize dollar is fixed to the US dollar at a rate of 2:1, which further exposes it to external market changes, particularly fluctuations in the US economy.

The country's domestic industry is limited by relatively high-cost labour and energy costs, as well as a small domestic market. As a result, Belize relies heavily on foreign direct investment, particularly in the tourism, energy, telecommunications, and agricultural sectors. The manufacturing industry in Belize has been in decline, with utility costs weighing down value-added gains from food manufacturing and construction activities.

Belize has also been impacted by global inflationary trends, with inflation rising from 0.1% in 2020 to 6.3% in 2022. Higher prices on imported goods and supply chain costs have affected the country's economy, particularly in the agricultural sector. The country's close trade relationship with the United States and other major economies makes it susceptible to the economic policies and conditions of these partner nations.

The country's economic performance is heavily influenced by tourism

Belize's economy is a small, private enterprise economy that is heavily influenced by tourism. In 2017, tourism was the largest service sub-sector, contributing 15% to the country's total GDP. This figure was expected to rise to 54% of GDP in 2028. The industry also directly contributed to 13.4% of total employment, accounting for 21,000 jobs in 2017.

Tourism in Belize has grown considerably in recent years, and it is now the second-largest industry in the nation. In 2012, Belize welcomed almost one million tourists in a calendar year for the first time in its history. The country's diverse attractions, including the Belize Barrier Reef, hundreds of offshore islands, excellent fishing, safe waters for windsurfing and swimming, and numerous jungle and wildlife reserves, have made it a popular destination for international tourists.

The growth in tourism has positively impacted other industries in Belize, including agriculture, commercial, finance, and construction. Tourism attracts the most foreign direct investment in Belize, contributing to the country's economic growth and development.

However, it is important to note that Belize's economy also faces challenges, such as a growing trade deficit, high labour and energy costs, and a small domestic market. The country's economic performance is highly susceptible to external market changes, and it relies heavily on foreign trade with the United States as its primary trading partner.

Belize's economy is based primarily on agriculture

Belize's economy is a small, private enterprise economy based primarily on agriculture, tourism, and services. In 2022, the country's GDP grew to US$2.95 billion, a 12.1% increase from the previous year. Agriculture and seafood exports increased by 10.7% in 2022, with revenues rising or remaining steady for all major commodities except minerals and fuel.

Belize has about 8,090 km2 of arable land, but only a small fraction of this is under cultivation. The country's primary exports are citrus fruits, sugar, and bananas. Citrus fruits are the second most important agricultural crop, with oranges being the most prominent. In 2018, Belize produced 1.7 million tons of sugarcane, 100,000 tons of oranges, 80,000 tons of bananas, and 77,000 tons of maize, in addition to smaller productions of other agricultural products such as papaya, rice, and soy.

Belize's economy has historically depended on forestry. Logwood, used to make dye, was the country's initial main export. However, as the supply outstripped demand and synthetic dyes became more popular, loggers turned to mahogany. While the mahogany industry brought wealth to many merchants and traders, it was susceptible to market fluctuations and the slow growth rate of the trees. As the supply of accessible timber dwindled in the 20th century, the country's economy shifted to new sectors, with cane sugar becoming the principal export.

In recent years, Belize's agricultural sector has expanded its production of citrus fruits, bananas, seafood, and apparel. The country has also seen significant U.S. private investments in citrus and shrimp farms under the Caribbean Basin Initiative (CBI). This initiative provides duty-free access to the U.S. market for most Caribbean products, significantly expanding Belize's apparel industry.

The country's GDP grew by 12.1% in 2022

Belize's economy is a small, private enterprise economy that is based primarily on agriculture, tourism, and services. In 2022, the country's GDP grew by 12.1%, reaching a value of US$2.95 billion. This growth follows a 15.2% increase in 2021 and represents a significant recovery from the COVID-related decline. The rebound in economic activity was driven by a surge in international tourism, which accounts for approximately 40% of Belize's economy.

The growth in GDP can be attributed to the resurgence of international tourism, with revenues surpassing pre-pandemic levels. In 2022, Belize welcomed nearly 1 million visitors, with US tourists accounting for over three-quarters of international arrivals. This influx of tourists contributed significantly to the country's economic growth. Additionally, other service industries, including wholesale and retail trade, rebounded strongly and benefited from increased domestic spending.

Another factor contributing to Belize's economic growth in 2022 was the increase in agriculture and seafood exports, which rose by 10.7%. The removal of trade barriers and regional partnerships, particularly with Mexico, drove this growth. Domestic export receipts increased to US$242 million, with revenues rising or remaining steady for all major commodities except minerals and fuel.

However, it is important to note that the manufacturing industry in Belize continued to decline in 2022 due to high utility costs. Additionally, the country faced challenges from global inflationary trends, with inflation rising to 6.3% in 2022. Nonetheless, Belize's economy demonstrated resilience, and the national debt-to-GDP ratio improved, falling from 80.1% in 2021 to 68.5% in 2022.

In summary, Belize's 12.1% GDP growth in 2022 reflects the country's recovery in key sectors such as tourism and agriculture. The increase in exports and tourism revenues contributed significantly to this growth, highlighting the importance of these industries to the country's economic well-being. While there were some challenges, such as the decline in manufacturing and rising inflation, the overall economic outlook for Belize remained positive.

Belize's economic rebound was fuelled by increased tourism

Belize's economy is a small, private enterprise economy that is primarily based on agriculture, tourism, and services. In 2022, the country's GDP grew by 12.1%, a significant increase from the 15.2% rise in 2021.

Tourism is the number one foreign exchange earner for Belize's economy, contributing 15% of the country's total GDP in 2017. The industry is the largest service sub-sector, directly contributing USD $277.7 million to the economy. The total contribution, including indirect and induced effects, was USD $766.8 million, accounting for 41.3% of the GDP in 2017. This number was forecasted to increase to USD $1,250.7 million by 2028, making up 54% of the GDP.

The tourism industry directly contributed to 13.4% of total employment in 2017, accounting for 21,000 jobs. When including indirect and induced effects, the travel and tourism industry supported 59,000 jobs, or 37.3% of total employment, in 2017. These numbers are expected to rise by 3.9% by 2028.

Belize's rebound in tourism can be attributed to the addition of flights from countries other than the US, such as Air Canada, West Jet, and COPA Airlines, which facilitate more visitors from South America. The increase in direct flights to and from cities like Los Angeles and Fort Lauderdale has also played a role in the growth of tourism.

The country's diverse attractions, including the Belize Barrier Reef, offshore islands, excellent fishing spots, safe waters for various water sports, abundant jungle flora and fauna, and numerous Mayan ruins, support the thriving tourism and ecotourism industry.

The growth in tourism has positively impacted other sectors, including agriculture, commercial, finance, and construction. Belize welcomed almost one million tourists in a calendar year for the first time in its history in 2012, with tourist arrivals totalling 917,869 and receipts amounting to over $1.3 billion.

Belize's economic rebound was indeed fuelled by increased tourism, and the country continues to prioritise the development of this sector to combat poverty and drive economic growth.

Frequently asked questions