經濟研究
Belize

Belize

Population 0.4 million
GDP 5,638 $USD
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Synthesis

Major Economic Indicators

  2020 2021 2022 (e) 2023 (f)
GDP growth (%) -13.4 15.2 11.4 3.0
Inflation (yearly average, %) 0.1 3.3 6.3 4.1
Budget balance (% GDP) -7.7 0.2 -0.5 -1.0
Current account balance (% GDP) -6.1 -6.3 -9.0 -7.5
Public debt (% GDP) 133.1 111.0 102.5 97.7

(e): Estimate (f): Forecast *Including grants,  Fiscal year from April 1st to March 31st. 2023 data 2023/24

STRENGTHS

  • Natural and cultural assets conducive to high-end tourism (6.1% of GDP)
  • Highly competitive tourism industry compared with its regional peers
  • Mining potential (gold, bauxite, baryte, cassiterite)
  • Support from international lenders
  • Monetary peg to the USD

WEAKNESSES

  • External public debt (42% of GDP in 2023)
  • Underdeveloped manufacturing sector prompting dependence on imports; fuel imports account for around 10% of GDP
  • Non-diversified commodity exports (sugar cane, bananas, shellfish, fruit juices)
  • Agricultural and tourism sectors exposed to often violent climatic events (hurricanes)
  • Dependence on tourism and visitors from the United States (65%) and the United Kingdom (20%)
  • High level of crime, with pervasive drug trafficking, money laundering and corruption
  • Public under-investment in infrastructure
  • Small domestic market
  • Glaring inequality (Gini coefficient of 53.3) and rampant poverty

Risk assessment

Resilient activity despite gloomy regional situation

Growth slowed gradually in 2022, with the trend accelerating rapidly as of the last quarter. Inflation eroded household consumption (54.5% of GDP in 2022). Belizean growth will stabilise at a moderate level in 2023. The moderate drop in unemployment (less than 8% after 8.4% in 2022) due to the recovery in tourism (more than 13% of jobs, 27% of GDP by 2023 compared with 38% in 2019), extended subsidies on fuel and public transport costs will support private consumption. In addition, merchandise exports (23.3% of GDP by 2023) are expected to exceed their pre-pandemic level. Buoyed by world prices, robust sugar cane exports (30% of goods exports in 2021), bananas (18%) and minerals (7%) should largely offset stagnating prices of fruit juice (10%), lobsters and conch (10%). Last, despite the slower recovery of the cruise industry due to the weaker American economy, cruise activity will support private investments (11.9% of GDP) and public investments (6.6%). On that score, the private project for three new cruise ports ("Port Coral project concept") is due to be finalised: the land port Magical Belize and the offshore cruise terminal Port Coral on the island of Stake Bank should start. Discussions between the government and private investors regarding the size of a related complex on the island of Drowned Caye are reportedly coming to a successful conclusion. The new public investments will modernise the port of Belize City, thereby attracting more cruise ships.

 

Tourism recovery reduces current account deficit, fiscal consolidation continues

In 2022, the current account deficit widened due to the rise in oil prices (hydrocarbon imports represented 10.8% of GDP in 2022) and is expected to narrow slightly in 2023.  The smaller energy bill will reduce the trade deficit (27.7% of GDP in 2023 compared with 29.3% of GDP in 2022). The recovery in tourism will boost the surplus in the balance of services (22.7% vs. 21.6% in 2022). Expatriate remittances from (5.4% of GDP, 94% of which came from the United States in 2021) would compensate for the profits repatriated by the foreign tourism operators. FDI associated with the tourism sector (5% of GDP by 2023) and multilateral loans (at least 4% of GDP) will finance the current account deficit. It should be noted that the latter deficit can be mainly explained by imports of hotel equipment (at least 6% of GDP in 2021). Moreover, the Belizean central bank has sufficient reserves – these accounted for at least 3.5 months of imports at the end of 2022 – to maintain the currency peg (2 BZD = 1 USD).

In 2022, household subsidies undermined the fiscal balance achieved through current expenditure restraints, namely by reducing the public-sector wage bill. The public deficit will remain low in 2023, although it may increase slightly due to weaker economic activity. Debt service costs (1.8% of GDP) and the primary surplus (i.e., excluding interest, which represents 1.2% of GDP) remain stable. First, tax revenues (23% of GDP for 2023) will continue on back of buoyant tourism and optimised tax collection. Second, public spending will stabilise (22% of GDP) on back of continued wage moderation. The introduction of a minimum wage (5 BZD per hour) and prolonged subsidies will be compensated by the decline in social transfers (4.7% of GDP for 2023). Capital expenditure is not expected to change (5.6% of GDP) and will focus on tourism infrastructure and housing construction.

External loans, notably from the US government (International Development Finance Corporation), will help finance the public deficit on advantageous terms. At the end of 2021, an agreement with The Nature Conservancy (TNC, an American environmental organisation) made it possible to refinance the superbond maturing in 2034 (USD 553 million, i.e., 30% of GDP) by issuing "Blue bonds" (USD 364 million maturing in 2041 with a 10-year grace period) arranged by Credit Suisse and accompanied by political risk insurance by the DFC (US International Development Finance Corporation, an American development bank). The resulting debt paydown (USD 250 million) and debt servicing savings (USD 200 million) are partly offset by a requirement that the Belizean authorities spend USD 180 million on marine conservation by 2041 and increase the share of its protected shoreline to 30%. In 2022, a discount on the PetroCaribe debt owed to Venezuela reduced the debt burden to 4.4% of GDP. These two operations, together with strong economic recovery, the rebasing of GDP and the primary surplus, have resulted in a significant reduction in the debt burden.

 

Fragmented opposition, border disputes

The head of state is Charles III of the United Kingdom and the 14 other Commonwealth realms. In 2020, Johny Briceño of the People's United Party (centre-left nationalist) succeeded Dean Barrow of the United Democratic Party (centre-right), who had been in power since 2008, as Prime Minister for a five-year term. Divisions within the opposition party is allowing the Briceño government to enjoy a comfortable parliamentary majority (26 of the 31 seats in the House of Representatives, 6 of the 13 seats in the Senate) to pursue fiscal consolidation and the crackdown on crime associated with the large-scale drug trade. In addition, tensions between Belize and neighbouring Guatemala are set to continue in 2023, as a decision by the International Court of Justice (ICJ) on their border dispute is not expected until 2024. As for Honduras' border claims, the ICJ will begin its investigation in 2023. Belize and Taiwan have diplomatic relations with development programmes.

 

Last updated: June 2023

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