Belize’s economic recovery will lose steam

Subject

The Belize economy.

Significance

Belize’s economic recovery is stagnating following a severe drought that has had a harsh impact on agriculture and hydropower generation. The situation has been compounded by a slowdown in tourist arrivals following years of buoyant growth, reflecting weaker global expansion and the grounding of Boeing 737 MAX aircraft, which service the country.

Impacts

• The current account deficit will remain large, with international reserves averaging just three months of imports.
• The primary surplus will narrow due to increasing spending on wages and public investment and weaker-than-expected revenue.
• This being an election year, cuts to current expenditures will probably be off the table, limiting debt reduction in the short term.
• Funding constraints will hit the government’s ability to pursue much-needed reforms in infrastructure and education.