Belize: Economic Outline

Economic Indicators

In recent years, Belize had been showing encouraging signs of growth derived from strong tourism inflows and the external sector, particularly merchandise sales. According to the IMF, following a robust growth of 17.9% in 2021 and 8.7% in 2022, the real GDP is estimated to have continued to grow strongly by 4.5% in 2023, led by the expansion of the tourism, construction, retail and wholesale trade, transport, and business process outsourcing sectors. As a result, real GDP was 16% above pre-pandemic levels in 2023. Growth is projected at 3.5% in 2024 and 2.5% from 2025 onwards as tourist arrivals return to pre-pandemic levels and the output gap closes.

Belize boasts a revenue-to-GDP ratio that is higher than other countries in the region, and, despite facing a significant level of public debt in recent years, that figure has been decreasing. Public debt declined from 103% of GDP in 2020 to 66% in 2023, propelled by robust nominal GDP growth, a significant enhancement in the primary fiscal balance, a debt-for-marine-protection swap with The Nature Conservancy, and a discount in Belize's Petrocaribe debt with Venezuela. As per the IMF, the primary balance is expected to decrease from 1.2% of GDP in FY2022 to 0.8% in FY2023 due to lower nontax revenues and grants, coupled with increased expenditure on goods and services. Looking ahead, the primary balance is forecasted to rebound to 1.0% of GDP from FY2024 onward as capital expenditure stabilizes. However, the overall fiscal deficit is anticipated to climb from 0.6% of GDP in FY2022 to 1.4% in FY2023-25 due to higher interest payments on external debt. Public debt is projected to decrease at a slower pace in the future, reflecting the anticipated moderation in growth and persistently high global interest rates, remaining above 50% of GDP over the next decade. Inflation, which dropped to 4.4% in 2023 due to reduced prices in transportation and utilities, partially balanced by increased food inflation, is expected to further decrease to 3.1% in 2024 and 1.3% over the medium term as commodity prices and global inflation ease (IMF). Between 2022 and 2023, domestic banks' regulatory capital increased from 15.1% of risk-weighted assets to 16.1%; nonperforming loans decreased from 6.9% of total loans to 5.2%; and returns on assets surged from 0.3% to 1.5%. Nevertheless, persistently high nonperforming loans, inadequate capital buffers, and restricted liquidity in certain banks compared to pre-pandemic levels are restraining private sector credit expansion. This constraint is likely to limit investment and real GDP growth in the future.

The unemployment rate decreased from 14% in 2020 to 3.4% in 2023 and is anticipated to remain at 3.4% over the medium term, reflecting the economy's sustained full employment status. Belize has a high GDP per capita when compared to the rest of the region. However, there are still high levels of poverty and income disparity. Belize also has a problem with violent crime, largely drug-related, and the trafficking of narcotics to the United States. Increasing investment in infrastructure, implementing targeted social programs, and enhancing crime prevention measures could alleviate the negative impacts of fiscal consolidation on vulnerable households. Simultaneously, these measures would stimulate growth, foster inclusivity, and enhance resilience to climate-related shocks.

Monetary Indicators	2016	2017	2018	2019	2020
Belize Dollar (BZD) - Average Annual Exchange Rate For 1 GHS	0.50	0.46	0.44	0.38	0.36

Source: World Bank - Latest available data.

© eexpand, All Rights Reserved.
Latest Update: May 2024