Belize Economic Outlook
Annual GDP growth accelerated in Q3 thanks to strong showings by the transportation, retail and hospitality sectors amid a recovery in tourist arrivals and the dwindling impact of Covid-19. In Q4, the economy should have slowed: Tourist arrivals growth waned compared to Q3 and remained 32% below its pre-pandemic level in the quarter. Similarly, annual growth in export revenue softened in Q4 from Q3. That said, the unemployment rate was 5.0% in October, half the rate of the same month of last year, which, along with declining inflation in the quarter, likely boded well for private spending. In early 2023, available data paints an upbeat picture: Price pressures cooled in January, and growth in export revenue rose. Meanwhile, in February, the IMF underlined during its article IV mission that risks to growth and financial stability were tilted to the downside, as the country should focus on lowering its public debt.
Belize Inflation
Inflation softened to 6.6% in January from 6.7% in December, while month-on-month inflation declined at the fastest rate since December 2021. This year, tighter monetary policy and a base effect will soften price pressures. A factor to watch is the depreciation of the U.S. dollar—the Belizean dollar is pegged to the USD—which would increase the cost of imports.