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Economy In Recession

Economy In Recession
December 14
12:24 2019

Economy In Recession

On -Thursday, December 12th, 2019
According to the latest figures released by the Statistical Institute of Belize, the economy contracted by 0.4% in the third quarter of 2019, compared to the same period in 2018. Previously, the SIB had released figures which showed a positive growth of 1.8% in the third quarter, but in a statement via email this week, that entity explained that it had to revise its GDP estimates downward.

“This amendment was as a result of an error in one piece of data obtained from one of the SIB’s data providers and affected the ‘Electricity and Water’ sector, which was revised downward from $44.2 million worth of production and a growth rate of 10.7 percent to a total output of $30.3 million and a decrease of 24.1 percent. The percent change within the Secondary Sector, within which electricity production falls, was also adjusted from a 4.5 percent rate of growth to a decrease of 10.8 percent. As a result, the total GDP for the quarter was also affected, going from a total of $663.1 million to $649.2 million and from a growth rate of 1.8 percent to a contraction of 0.4 percent,” the release explained.

In the primary sector, there was a drop in banana production, explained by the prolonged dry. The fishing industry also experienced a 37% decrease, as no conch was exported during the quarter and shrimp exports dropped considerably by 76%. These reductions in banana and marine production overshadowed growth recorded in the livestock, sugarcane and citrus industries.

The secondary sector, which accounts for almost one fifth of the country’s economic activity, decreased by 10.8% during the third quarter of 2019.
Electricity generation decreased by 28.8%, attributed to the prolonged dry, while there was also a drop in the Construction sector, with a ‘substantial drop’ in loans for construction during the third quarter.

The tertiary sector, which accounts for about a half of Belize’s total economy, grew by 1.9 percent in comparison to the third quarter of 2018. Still, the Hotels and Restaurants sub-sector decreased by 11.1%. Both cruise ship and overnight tourism figures were down, cruise ship arrivals by 20.7%. There was a corresponding drop in hotel revenues of 6.2%.

In its latest consultation in Belize, the IMF cited near zero inflation and a historic low in unemployment, but expressed some concern, stating that “recent data indicate a slowdown in economic activity, reflecting a severe drought. Growth for 2019 as a whole is projected at 1½ percent. The current account deficit remained large in 2018, at 7.9 percent of GDP….the medium-term outlook remains challenging. Real GDP growth is projected at just below 2 percent over the medium term. The current account deficit is expected to remain large, with international reserves at about 3 months of imports of goods and services. Public debt remains elevated, at above 90 percent of GDP. Belize is vulnerable to weaker U.S. growth, which would impact tourism, to higher oil prices, and weather-induced natural disasters. Violent crime poses risks to growth, competitiveness, and macroeconomic stability. The financial system remains vulnerable to a loss of CBRs.”

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