The US Federal Reserve chairman, Jerome Powell, said in a 60-Minute interview that a recovery won’t happen until the end of 2021. He expects US GDP to shrink in the second quarter by around 30% and unemployment to be around 25%.
These numbers are similar or worse than the Great Depression, but Powell said it will not be a depression. Fishermen do not say that their fish is stink. The situation is likely worse than he said.
The question is, what is Belize going to do in response to this new global economic crisis triggered by COVID19? Canada, Japan and Europe are also in recession. These countries are integral to global trade and global tourism.
A big part of Belize’s economy is tourism (almost 50%). But that will be anemic. A contingency plan is needed to strive in these challenging times. Based on many economists’ analysis, there will be deflation and later, inflation.
The best strategy must include agriculture and agro-processing, because the cost of food will increase and the supply of food is projected to decrease.
Secondly, Japan, China, US, UK and Europe have been creating over $9 trillion dollars. This will lead to currency volatility. The US currency, after rising, will devalue. It happened after the 2008 financial crisis, but it will be greater, since the quantitative easing is much greater.
The Central Bank of Belize should buy precious metals (gold and silver) for security.
The Cold War between China and the US will heat up. Besides the trade wars, international diplomatic wars, corporate sabotage and cyberwar are likely.
Belize’s neutrality is unlikely, but choosing any side will have serious repercussions. What is Belize going to do? Just cutting government’s expenses will create as many problems as it solves.
Brian E. Plummer