Economy Contracts Sharply In 2020 First Qtr
And while schools may not re-open soon, what about the economy?
That topic came up today during their virtual press conference on the economy and its performance for the first quarter of 2020. As viewers will remember, the COVID-19 pandemic began to directly affect Belize in the last few weeks of March. By that time, international travel was already shutting down because of the outbreak of the deadly and highly contagious virus. Those in the tourism industry were already bracing for that hit, but today, the SIB told the press that last year's drought was already wreaking havoc on the country's gross domestic product.
Here's statistician 2 Jacqueline Sabal's presentation on the quarterly GDP for the first 3 months of 2020:
Jacqueline Sabal - Statistician II, SIB
"If we look at what each sector contributed to the total GDP in the first quarter of 2020, the sector with the largest contribution was the tertiary sector, which accounted for 62% of production. The secondary sector accounted for roughly 12.6%, the primary sector, 11.4%, and the remaining 14% is in taxes. For the first quarter months of January to March 2020, Belize produced goods and services totaling 709.6 million dollars. This represents a decrease of 33.4 million dollars, or 4.5% when compared to the first quarter of 2019. Looking specifically at the first-quarter GDP at constant prices, over a 7-year period, the largest first-quarter growth was recorded in 2015, at 7.7%. Banana performed well during this quarter. Sugarcane deliveries were up, as we continued to expand into the west. Livestock production increased, and shrimp exports also made some strides. Overnight and cruise tourism grew as well. Now, the 4.5% decline experienced in the first quarter of this year, 2020, is the only first-quarter decline recorded since 2014, when production fell by 1.9%. This 4.5% decline was due to decreases across all sectors: primary secondary and tertiary. The country struggled with dry weather conditions and the impact of COVID-19 restrictions."
"During the first quarter of 2020, the primary sector recorded a total output of 80.8 million dollars. This represents a decrease of 6.6% or 5.3 million dollars when compared to the first quarter of 2019."
"Production within the secondary industries decreased by 13.2%. This represents a 13.6 million dollar decline in output, bringing the total for this industry to $89.3 million for the quarter."
"Production within the tertiary sector decreased by 3.3%, or 15.2 million dollars, totaling $440.2 million for tertiary industries. Within this sector, we saw a decline in the hotels and restaurant industry by 22.5%, or 9.8 million dollars, bringing the total for that industry to 34 million dollars Transportation and communication activities decreased by 8.6%, or $5.8 million, totaling 61 million dollars. Wholesale and retail trade activities also decreased by 0.2%, totaling 149 million dollars. The sector asserting positive pressure on GDP is government services, which increased by 4.1%, or $3.5 million, totaling 87 million dollars, due to normal annual increments."
"I think it's important to note that not only did we struggle from the impacts of COVID-19, but we were also severely impacted by the drought. The drought severely impacted our primary sector."
"Agriculture suffered from that, which then flows through to the secondary sector because the secondary strongly depends on the primary sector. In terms of the impact of COVID-19, we know that our services sector suffered from that. We see the decline in tourist arrivals, which we will continue to see throughout the rest of the year."
The Cost of Living Ticking Up
And while many are lining up for free food - for those still buying, what are prices like? From the Statistical Institute, we have a snapshot of the cost of living countrywide, and where in the country it was the cheapest to live during the first quarter of this year.
According to the SIB, Orange Walk had the highest cost of living, while Punta Gorda had the lowest. Here's how Statistician Melvin Perez explained why during today's press conference:
Melvin Perez - Statistician II, SIB
"The inflation rate for the month of April 2020 stood at -0.02%. This means that overall, the cost of regularly purchased goods and services has decreased relatively small by 0.02%, when compared to April 2019. Before we look at all the major categories affecting the inflation rate of -0.02%, let's look at the all-items consumer price index, which summarizes all categories of goods and services for the past 5 years. With our main emphasis being the month of April, we noticed that both April 2019 and April 2020, recorded a consumer price index of 105.3, which is why the decrease for the period was relatively small of 0.02%. This does not indicate that there was no change during this period, but rather, the increases and decreases offset each other, which we will see throughout the presentation."
"Looking at the major categories affecting the inflation rate, the housing, water, electricity, gas, and other fuels had an increase of 0.8%. The food and non-alcoholic beverages category had a decrease of 0.5%. The transport category had a decrease of 0.9%. And now, I must say that the transport category was the main category exerting downward pressure on the overall consumer price index And for the purpose of this presentation, we group the remaining goods and services into the all other categories of goods and services, which had an increase of 0.2%."
"It can be clearly seen that the decrease in the transport category was partially offset by the increase in housing, water, electricity, gas, and other fuels. And the decrease in the food and non-alcoholic beverage category was partially balanced by the all-other category of goods and services, which had a decrease of 0.2%."
"First, let's look at the housing, water, electricity, gas, and other fuels, which had an increase of 0.8%. This increase was mainly due to a rise in home rental costs, which went up by 1.2%, as higher prices in Orange Walk Town, Belize City, San Ignacio, and Santa Elena Towns, Dangriga Town, and Punta Gorda Town were recorded. This increase, however, was partially offset by a significant decrease in the liquefied petroleum gas prices, which went down by 13.9%."
"Since the food and non-alcoholic beverages category is one of the categories affected by the pandemic, COVID-19, I want for us to take a look at how prices within this category, has been affected for the month of April 2020, when compared to March of 2020, as this is the period when the COVID-19 in Belize was at its peak. If you look at the graph, you can see, that there was a spike from March of 2020 to April of 2020. This spike is an increase of 0.4% in prices within the category."
"At the municipality level, it can be clearly seen that Orange Walk Town experienced the highest monthly increase in consumer prices, with an inflation rate of 2.1%. Consumers in this town saw an above-average increase in prices for food items home rental cost, laundry services, and maintenance and repair of motor vehicles. Meanwhile, in the south, Punta Gorda Town experienced the lowest inflation rate, with prices going down by 1.9%. Consumers in this town saw greater than the average reduction in food items and women's clothing and footwear."
Trade Affected By COVID 19
The Statistical Institute of Belize also provided insight on how the country's imports and exports performed as a result of last year's drought, and the emerging COVID-19 threat.
We start first with the presentation on the imports, and according to Statistician Tiffany Vasquez, Belize imported a lot less fuel, which contributed to a 30.4% decrease, when compared to the same period last year. Here's how she explained why the State of Emergency and the restriction of movement directly affected fuel importation:
Tiffany Vasquez - Statistician 2, SIB
"For the period January to April of 2020, Belize's imports were valued at 587.9 million dollars. This was a decrease of 2.4% or 14.5 million dollars when compared to January to April of 2019. A substantial decline in fuel expenditure in April of this year was the main reason for this downturn in imports. The mineral fuels and lubricants category, which consists all of our major fuels, including premium, regular, diesel, and kerosene, a category which accounts for 13% of all imports, fell considerably by 23 million dollars to 73.6 million over the 4-month period, a drop due almost entirely to April's plunge in fuel imports. One should note that notwithstanding the current lower world market prices for fuel, a decline of this magnitude was the direct impact of COVID-19. For in April of this year, where Belizeans were at their least mobile, due to restricted movements in accordance with the State of Emergency, only a small shipment of regular fuel was imported into the country. The demand for fuel by local consumers simply was not there. Furthermore, the period also saw smaller decreases in imports across other commodity categories. The categories of manufactured goods and other manufacturers, which made up 21% of all imports, together went down by 6.3 million dollars over the period, to 123.8 million, due to reduced imports of steel rods, cement, and plastic containers. In additional crude materials, which comprise only 1% of total imports dropped by 2.4 million dollars to 7.7 million, as the country imported less treated pine lumber during the first 4 months of this year when compared to that same period last year. Despite the overall drop in imports, however, a few categories grew notably, over the 4-month period, with greater imports across a number of food items including lard or shortening, corn seeds, and chicken sausages. The food and live animals category, which constitutes 13% of all imports, went up by 6.3 million dollars to 77.1 million. The country also imported more beer and aromatic bitters over the period, driving the beverages and tobacco category up by 4.1 million dollars to 15.8 million. Purchases in this category amounted to 3% of our total imports. Furthermore, chemical products, which accounted for 10% of all imports, rose by 3.3 million dollars to 56.5 million, as the period saw boosted imports of fertilizers, along with hand sanitizers and disinfectants, the latter most likely linked to the demand of our new COVID-19 reality. Lastly, the oils and fats category, which constitutes a mere 2% of imports, grew by 2.3 million dollars to 8.8 million, due to larger purchases of cooking oil."
Vasquez then went on to explain how last year's drought had a major negative impact on the country's agricultural exports during this year's first quarter. Here's that presentation: