Belize Economic Outlook
GDP growth clocked in at 11.5% year on year in Q1 2023, below Q4 2022’s 12.4%. The retail and manufacturing sectors slowed, and the agricultural sector contracted further. However, the hospitality and financial services sectors grew at a faster rate. In Q2, growth likely continued to slow, partly due to a challenging base of comparison after a strong post-pandemic rise in GDP in Q2 last year. Compared with the previous quarter, merchandise exports declined more sharply year on year in the second quarter, while average annual private sector loan growth slowed. Additionally, tourism sector arrivals grew 8% year on year in the second quarter, down from 47% in Q1. More positively, lower average inflation in Q2 likely contributed to increased household spending.
Inflation slowed to 2.8% in July, down from 3.3% in June, the lowest reading since May 2021. Average inflation is set to moderate this year compared to 2022, mainly due to lower external price pressures and a tougher base effect. The El Niño weather pattern poses an upside risk.