It’s not the prettiest picture that’s seen when we take a first glance at the latest data from the Statistical Institute of Belize (SIB) on our exports and imports for 2019. The SIB says that between January and December 2019 we exported $411.8 million worth of goods, and we imported $1.97 billion worth of goods. In terms of dollars, goods we imported exceeded goods we exported by $1.56 billion, and expressed as a fraction, our imports exceeded goods we exported by almost five times.
The picture is not as bleak as it looks at first glance. A sizable chunk of our imports are destined for the Commercial Free Zones, so our import bill is not as large as we see in the report. The SIB says that the cost of goods imported into the free zones went up from $324 million in 2018 to $329.9 million in 2019.
The disparity between our exports and imports is large — year in, year out. The SIB files show that our gross imports for 2012 was $1.68 billion and the value of our major domestic exports for that year was $678.6 million, and in the subsequent years the figures were as follows: 2013: imports $1.81 billion, exports $668.3 million; 2014: imports $1.92 billion, exports $614.4 million; 2015: imports $1.99 billion, exports $536.6 million; 2016: imports $1.9 billion, exports $401.93 million; 2017: imports $1.8 billion, exports $445.6 million; 2018: imports $1.9 billion, exports $393.9 million; and 2019: imports $1.97 billion, and exports $411.8 million.
As we see here, our merchandize exports are doing poorly. If we compare our exports for 2019 with exports for 2012, our output has fallen by $266.8 million, about 40%.
World Integrated Trade Solution (WITS), at the website wits.worldbank.org, shows the countries we imported the most goods from in 2018. We imported $814 million worth of goods from the USA, $230 million from China, $206 million from Mexico, $142 million from Guatemala, and $60 million worth of goods from Panama.
On the export side, WITS says the top five countries that bought our goods are the USA ($150 million), the UK ($144 million), Jamaica ($30 million), Ireland ($26 million), and Barbados ($20 million).
Belize, like all other countries, buys goods and services from abroad, and sells goods and services to pay for what it imports. Every year we run a trade deficit, and the amount is added on to what we owed before, so our international debt keeps growing.
A lot of countries around the world run trade deficits, some big ones too. The mighty United States has been racking up trade deficits for a number of years with China, and now they are extremely worried about their huge debt, which they say has come about because China keeps violating global trade rules.
If we depended only on the export of goods, our annual trade deficit would be huge, but we do have other sources of earnings to narrow the gap.
Belize, like the great USA, borrows to pay for some of the goods we import. Belize also gets remittances from abroad. Trading Economics at the website tradingeconomics.com, says, ”Belize averaged 63.95 USD million (in remittances) from 2001 until 2018, reaching an all-time high of 90.20 USD million in 2018 and a record low of 24.30 USD million in 2002.”
The service industries contribute the most foreign earnings to pay for our imports. Call centers (Business Process Outsourcing (BPO)) not only help provide jobs for Belizeans, but the services they sell also bring in needed cash from abroad. Call centers appear vulnerable because of machine learning; the voice assistants, like Alexa and Cortana, could possibly substitute for human beings on the phone lines in the not-too-distant future.
Offshore services (tax havens) contribute by providing employment for Belizean lawyers, accountants and secretaries, and bringing in foreign currency to pay them, but this type of business comes with issues — one of them being the dangers they present to our banking system because of their vulnerability to money laundering.
Tourism is by far our biggest service industry. Statista, at the website statista.com, says UNWTO (United Nations World Tourism Organization) reported that Belize’s “tourism revenue amounted to 427 million U.S. dollars in 2017, up from 391 million U.S. dollars in 2016.”
Belize’s Central Bank says double-digit increases in both overnight and cruise ship visitors led to increased tourism earnings in 2018.
Tourism for sure earns a lot of money, but it is not easy to find out how many of the dollars that circulate in the industry actually serve our economy. It isn’t easy to determine exactly how much tourism contributes, because there is a lot of foreign ownership of the industry, and some/much of what we earn is repatriated. We don’t have a good grasp of what is staying, but we have a good grasp of what’s coming in.
Other areas we noted (in the 2018 Central Bank report) that help us with foreign dollars to narrow the trade deficit are inflows to foreign embassies and military units stationed in Belize; foreign contributions to religious and other non-profit organizations; foreign investments in real estate, agriculture, and tourism–related construction activities; and grant assistance from the European Union for major road construction projects and to fund investments in the banana and sugar industries.
The underworld, the illegal narcotics trade, also brings in money, laundered foreign currency (we don’t know how much) that goes to buy some of the imported goods mentioned in the SIB report, but when we consider the heavy costs of illegal earnings – heavy restrictions on our banking system, violence in Belizean society, security costs — it were better that the transnational drug trade didn’t exist in Belize.
Our international debt went from $256 million in 1989 to $2.5 billion in 2017, an average increase of almost $80 million per year. In the decade between 1989 and 1998 the external debt grew a little more than $26 million per year, but in the years between 1998 and 2017 it averaged out at about $100 million per year.
Our average yearly trade deficit isn’t that large, when compared to our economy. The experts at the Global Economy Guide say that “since economies typically grow at about 2-3 percent per year, the rule is that a trade deficit is sustainable if it doesn’t exceed 3 percent of GDP (the total value of goods and services produced in a country in a year) for many years.” Belize’s average GDP for the years 2008 to 2017 was $3.18 billion, and with our average trade deficit at $100 million per year, our annual trade deficit was about 3.14% of our GDP for much of the last decade; however, our economy has made a downward turn.
At the end of the day, Belize’s economy is chugging along, but we are far too dependent on the sometimes fragile service industries, and our production of goods for export is failing. There are a couple other troubling issues on the economic front, and those are that our national pie is too small, and there is tremendous disparity in the distribution of our wealth.