A downturn in production of major exports was exacerbated by Hurricane Earl, which struck Belize last August
BELIZE CITY, Wed. Mar. 29, 2017–Amandala’s review of statistics released to the media today, at a press conference held by the Statistical Institute of Belize (SIB) in Belize City, revealed that Belize experienced its first year-long recession in more than two decades. The official data indicate that for the first time since at least 1995, the country recorded four consecutive quarters of negative growth.
The last time Belize experienced a recession was 2007-2008, around the time of the change of administration from the People’s United Party (PUP) to the United Democratic Party (UDP). It is noteworthy that the recession of 2016 followed another major election season, although this recession, notwithstanding the fact that it was more protracted, was not as deep as the former.
Angelita Campbell, SIB Statistician, updated the media today on GDP growth for the final fourth quarter of 2016, which saw both primary and secondary sectors, including agriculture and fisheries, contract. Campbell noted that the only expansion was seen in the tertiary sector, largely due to growth in tourism, which, with an increase in government services, offset the contraction in wholesale and retail trade.
Notably, even beer production, which has been trending upward at least since 2011, fell during the fourth quarter of 2016, but water production was up due to more connections coming online. Meanwhile, crude oil continued on its downward plunge, with production falling to 105,000 barrels, less than a third of the production recorded for the last three months of 2011.
Overall, for the fourth quarter of 2016, the gross domestic product stood at $666.7 million, down 1.2% or $7.9 million, the first drop for the quarter and the first contraction for that period, at least since 2011.
The biggest decline was felt in the primary sector, which largely buttresses the Belizean economy. Production fell by 12.4%, due to a downturn in several major industries. Things were exacerbated by Hurricane Earl, which struck Belize last August. In the case of the banana industry, the natural disaster compounded the closure of a banana farm, pushing production down by a whopping 30%. Fishing was down by 6.1%, mitigated by the expansion in shrimp production.
The secondary sectors saw a 3.6% contraction, with a 14.6% drop in petroleum production when compared with the same period in 2015. Sugar was a bright spot in the last quarter of 2016, with production up 33.3%.
Campbell noted that beverage production was down by 7.5%, with a 16% drop in soft drink production and a 0.6% fall in production of beer. She noted, though, that there was a simultaneous increase in the importation of beers and soft drinks.
In his budget presentation on March 13, Prime Minister and Minister of Finance Dean Barrow announced that GDP had contracted by 0.8% in 2016, citing from the SIB. Today, when we asked the SIB about that figure, we were told that the final report for 2016 is still not ready, but the preliminary information is in line with the contraction reported by Barrow.
Hurricane Earl affected most of the agricultural sector, adding to pre-existing challenges facing that sector, as well as the aquaculture sector.
In light of assertions made by Prime Minister Barrow that the Belizean economy is rebounding, we asked Campbell whether their data reflects such a rebound. She told us that the data for 2017 won’t be ready until around April, and they do not do economic forecasts.
Central Bank explains its forecast for 3% GDP growth this year
In announcing a forecasted GDP growth of 3% to 3.5% from 2017, Barrow cited information from the Central Bank of Belize. When we contacted experts there today, they told us that the 3% is their conservative estimate and the 3.5% is their optimistic estimate, based on information gleaned from the key sectors.
We were told that the rebound has been forecast for the shrimp industry, in which production has been increased after challenges with the early mortality syndrome through a cycle of farming with tilapia, which improves conditions by exuding an antibacterial agent.
In 2016, the contraction was mainly generally due to lower production of export crops and less fishing output. The positive GDP forecast by the Central Bank assumes a shrimp recovery, as well as a substantial increase in sugar production by Santander in western Belize, with positive output from the Belize Sugar Industries in northern Belize.
The Central Bank information also indicates that banana production, which was adversely impacted in 2016, is up based on numbers showing yields for the start of the year. It confirmed, as reported by the SIB, that citrus production continues to struggle, due primarily to the lingering effects of citrus greening, a crop disease, as well as a slower than anticipated pace for replanting, to help counter the impacts of the disease.
We were advised that tourism, which showed strong growth in 2016, will continue to grow, although not as much as last year.
We asked whether the GDP forecast considers plans by the Government to raise $80 million more in taxes, including hiking departure fees for foreigners visiting Belize. We were told that the potential impact of the tax measures was considered.
The Central Bank’s public information notice, which usually contains the forecast details, has not yet been released.
The Central Bank source cautioned that they cannot foresee unexpected events, such as hurricanes, and other downside risks, such as economic developments in source markets for Belize.
The Central Bank’s revised forecast for the year 2016 did not foresee a recession. It estimated GDP growth of 0.5% growth for 2016; contrary to the preliminary outturn of -0.8% contraction.