Belize's Economic Anchor: Unveiling The Nation's Top Revenue Stream

Tourism is the largest foreign exchange earner in Belize, contributing 15% of the country's total GDP in 2017. The country's natural beauty, diverse attractions, and proximity to the United States make it a popular tourist destination. The tourism industry in Belize directly contributed to 13.4% of total employment in 2017, accounting for 21,000 jobs. The total contribution of the travel and tourism industry, including indirectly supported jobs, accounted for 37.3% of total employment, or 59,000 jobs, in the same year. The sector is expected to continue growing, with investments in hotels and additional airline routes.

Belize's economy is highly reliant on tourism

Belize's tourism industry has been supported by the addition of new airline routes and investments in hotels. The country has also seen an increase in the number of available hotel rooms and hotels overall. However, there have been some setbacks, such as a decrease in cruise ship arrivals in 2019 due to a reduction in cruise calls, and a decline in the number of visitors opting to go on tours. Despite these challenges, the sector is expected to continue growing in the coming years.

While tourism is the primary source of foreign exchange earnings for Belize, the country also generates significant revenue from exports. The main export commodities include sugar, bananas, citrus fruits, marine products, and crude oil. In 2018, Belize's gross exports amounted to $200 million, with sugar and molasses, bananas, citrus, marine products, and crude petroleum being the top exports. However, the agriculture and agro-productive sectors, which include these exports, faced challenges in 2018, such as diseases that reduced production and diminished prices in the European market.

Belize's economy is also characterized by a high unemployment rate, a growing trade deficit, and large foreign debts. The country has a skilled labour force and a relatively higher cost of living compared to its neighbouring Central American countries. While English is the official language, there are places in the country where both Spanish and English are spoken, reflecting a trend towards Latin American culture.

Exports of sugar, bananas, citrus, and marine products

Belize's largest foreign exchange earner is tourism, but exports of agricultural products are also important to the country's economy. In this regard, sugar, bananas, citrus fruits, and marine products are key.

Sugar is the country's main export commodity, accounting for 30% of Belize's gross exports in 2018. The country's sugar industry has faced challenges in recent years, including declining prices in the European market. Nonetheless, it remains a significant contributor to the economy.

Bananas are another crucial export product for Belize, making up 18.5% of gross exports in 2018. Citrus fruits, such as oranges and grapefruit, also play a vital role, constituting 15.7% of total exports in the same year. However, in 2018, the citrus industry was impacted by diseases that reduced production.

Marine products, including fish and shrimp, are also significant, accounting for 10.7% of exports in 2018. This sector, too, has faced challenges, including diseases affecting shrimp production.

Together, these exports contribute significantly to Belize's economy, providing income and employment opportunities for its citizens. While tourism may be the primary source of foreign exchange, these exports form the backbone of Belize's agricultural sector and play a pivotal role in the country's overall economic performance.

The country's oil exports and exploration

Belize's oil exports and exploration play a significant role in its economy, although tourism is the country's largest foreign exchange earner. Belize's oil industry has experienced a mix of successes and challenges over the years.

The history of oil exploration in Belize dates back to the 1930s when the first exploration licenses were granted to major companies like Shell, Esso, and Texaco. However, it wasn't until 2005 that the first commercial oil discovery was made by Belize Natural Energy Ltd. (BNE) at Spanish Lookout. This discovery, along with a subsequent one in 2008 at Never Delay, positioned BNE as the sole producer of crude oil in Belize. The oil produced from these fields is exported to the US Gulf Coast or sold locally.

Belize has two main oil fields: the Spanish Lookout Oilfield and the Never Delay Oilfield. The Spanish Lookout Oilfield has reached a production of 5,000 barrels per day, while the Never Delay Oilfield is producing less than that. However, both fields are currently in decline, and new discoveries are needed to boost production. To address this, BNE and other independent companies are exploring new sites and employing advanced technologies, such as seismic surveys and drilling campaigns.

Belize's oil is transported by tanker trucks to an export facility in Big Creek, from where it is sold to Shell Trading. The country has road transportation routes to Mexico and Guatemala and a petroleum export terminal in the southern region. The petroleum industry in Belize is governed by the Petroleum Act and Regulations, with the Geology and Petroleum Department playing a regulatory role.

While oil exports and exploration have contributed to Belize's economy, the country faces challenges in this sector. There is growing public disaffection over oil drilling, particularly in sensitive areas like the Barrier Reef World Heritage Site. Additionally, Belize's limited transportation system and lack of pipelines or a rail system present logistical hurdles for oil exportation.

Despite these challenges, Belize continues to seek new onshore discoveries and has attracted several small independent companies to explore its onshore blocks. With a stable democracy and attractive revenue-sharing agreements, Belize remains hopeful for future oil discoveries and increased production to support its economic growth.

Belize's growing imports

Belize's economy is small and primarily based on agriculture, tourism, and services. In 2019, Belize's imports were valued at BZ$1.6 billion, with the US being the country's largest import partner, accounting for 44% of total imports. Imports from the US have been increasing yearly and include machinery & transportation equipment, fuels and lubricants, manufactured goods, food, and chemicals. Other major import partners include Guatemala, Hong Kong, Honduras, Trinidad & Tobago, and El Salvador.

In recent years, imports from other countries have been slowly increasing and replacing the dominance of US imports. For example, imports from Mexico, Guatemala, other parts of Central America, and China are on a gradual rise and are expected to continue doing so. Belize's imports from China specifically have been significant, with the country being the second-largest import partner in 2021, accounting for 15.91% of total imports.

Belize's trade deficit has been growing, mainly due to low export prices for commodities such as sugar and bananas. The country's import trade has been on a steady growth path, peaking at BZ$1.7 billion in 2015. The import trade exceeds the level of export trade due to the level of industrialization and market size in the national economy. Belize's gross imports for 2018 totalled $957.7 million, up from $913.2 million in 2017.

Belize's economy is highly susceptible to external market changes, and its economic performance is vulnerable to world commodity price fluctuations and the continuation of preferential trading agreements. The country's heavy reliance on foreign trade, particularly with the US, makes it sensitive to changes in the external economic environment.

The country's diverse economy

Belize's economy is diverse, with tourism, agriculture, and services as its primary sectors. The country has an open, private sector-led economy, with a steady GDP growth rate over the past decade due to expansionary monetary and fiscal policies. However, in recent years, the growth rate has slowed down to around 2%.

Tourism is the largest foreign exchange earner for Belize, contributing 15% of the country's total GDP in 2017. The country's natural beauty, including its Caribbean beaches, indigenous culture, and the Western Hemisphere's largest barrier reef, make it an attractive tourist destination. The travel and tourism industry is a significant contributor to employment, accounting for 37.3% of total employment in 2017. The number of tourists visiting Belize has been increasing, with a net increase of 2.8% from 2018 to 2019. The growth in tourism can be attributed to additional flights from countries other than the US, such as Air Canada, West Jet, and COPA Airlines, which bring in more visitors from South America. The hospitality industry has responded to the growing tourism sector by increasing the number of hotels and available rooms.

The second-largest foreign exchange earner for Belize is exports, primarily in the agricultural sector. Sugar, bananas, citrus fruits, marine products, and crude oil are the main export commodities. In 2018, the agriculture and agro-productive sectors faced challenges, including diseases that reduced citrus fruit and shrimp production, as well as declining prices for sugar in the European market. Despite these challenges, the gross exports for 2018 amounted to $200 million.

The service sector is another important contributor to Belize's economy, making up about 68% of the country's GDP in 2017. This includes transport, storage, post, and telecommunications services. The financial services sector, particularly international financial services, is also emerging as a significant contributor to the economy, with various tax benefits and incentives in place to promote investments.

Belize's economy has some challenges, including high unemployment, a growing trade deficit, and a heavy foreign debt burden. The country is susceptible to energy price shocks due to its dependence on energy imports. However, the government has implemented expansionary policies to promote economic growth and address issues such as poverty and inequality.

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