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Belize economy continues to shrink

GeneralBelize economy continues to shrink

BELIZE CITY, Wed. Aug. 31, 2016–With a decline in production from major contributors to the national economy, Belize’s Gross Domestic Product (GDP) continues to contract, with the tertiary sector, and primarily tourism, helping to buffer the negative effects of declines in sectors such as agriculture and fishing.

Overall, the Belize economy contracted by $22 million (or 1.5%) for the first six months of 2016, spanning January to June 2016. Jefte Ochaeta, SIB Statistician, announced at a press conference held today that there was a record 26% decline in the primary industries, led by sharp declines in the sugar, crude oil, banana and marine products.

The official data indicate that the Belize economy has contracted for the second consecutive quarter, with a decline of 1.6% for the second quarter following on the heels of a reported 2% decline for the first quarter of 2016. The statistical reports do not account for the impacts of Hurricane Earl, which struck in August.

The last marked growth was seen over a year ago. After March 2015, quarterly GDP has been mostly negative, with the exception of the last quarter of 2015.

“Estimates by the Statistical Institute of Belize indicate that the total value of goods and services produced during this period was $713.2 million, down $11.3 million from the $724.5 million produced during the second quarter of 2015,” the SIB reported.

It added that citrus production was down by one fourth from the second quarter of 2015, with 14,000 fewer boxes of orange fruit being delivered.

“This was as a result of smaller crops, aging fruit trees, and adverse weather conditions which affected fruit maturity,” the SIB said, adding that the closure of a large banana farm coupled with lingering effects of bad weather accounted for a 22% decline in banana production.

Ochaeta pointed to declines in the secondary sector as well, including a decline in livestock production, but there was an increase of 31% in the production of carbonated drinks, such as soft drinks.

“With the Spanish Lookout oil field, the only site still in operation, crude petroleum extraction continued to dwindle, dropping by 14 percent during the quarter,” the SIB said.

“Nonetheless, there were some bright spots within the secondary sector. Construction activities expanded by 12 percent, due to continued investment in infrastructure projects, while water production was up by 9 percent, as service continued to be expanded to rural communities,” the SIB said.

Another bright spot was the performance in the tertiary sector—which actually accounts for 60% of economic output. According to Ochaeta, this sector grew by 3.8 percent during the second quarter of 2016, led by tourism growth of 13%.

Both imports and exports down

In line with reduced economic production, the SIB recorded a decline in Belize’s domestic exports, and all major exports except citrus saw a decline. Banana exports declined a whopping 30%.

Declines were reported in exports of sugar, marine, bananas and crude.

“Sugar, which saw a 13 percent reduction in the volume of exports, faced a loss of more than one third in export revenues, from $104 million to $68 million, as prices fetched on the European market remained lower than they were in 2015,” the SIB said. Losses in sugar included the destruction of molasses attributed to Maillard Reaction at the Belize Sugar Industries last month.

“Earnings from crude petroleum dropped by almost one half, from $23.5 million to $12.5 million, the result of a decline in the quantity exported and coupled with lower world market prices,” the SIB said.

SIB Statistician, Tiffany Vasquez, noted that imports are also trending down, with the exception of April and May 2016.

For January to July 2016, Belize’s import bill is more than four times its export earnings, $1.1 billion versus $261.8 million for the first half of 2016. During that period, imports were down by 3.4%, or $40 million, while exports were down by 29%, or $106.8 million.

Inflation up

The SIB also reported on the latest inflation data. Angelita Campbell, SIB Statistician, told the media that inflation for July was up 1%, and by 0.6% for the first 7 months of 2016.

“Home rental prices, a major expenditure item for Belizean households, rose by an average of 2.5 percent compared to last July,” Campbell said.

However, this was partly offset by a decrease in the price of Liquefied Petroleum Gas (LPG). The average price of a 100-pound cylinder was down from $90 in July 2015 to $82 in July 2016.

Whereas gasoline prices were up overall by 1.5%, there was a marked increase in diesel prices of 13% over the same time last year.

Every municipality recorded increases in consumer prices during the month of July, with Orange Walk Town recording the highest inflation rate at 2%. On the other hand, Dangriga recorded the lowest rate of inflation at 0.2 percent.

Campbell said that fuel prices shot up in Orange Walk, and rental prices were notably high in Corozal while food prices saw a notable dip in Dangriga.

Mexico reported an inflation rate of 2.7% and Guatemala a rate of 4.6% for the same period, Campbell said.

GDP PowerPoint courtesy SIB

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