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Is Belize in the Throes of a Recession?

Posted By: Marty

Is Belize in the Throes of a Recession? - 12/12/19 12:10 PM

News of an economic downturn caused tremors in the private sector today.  Despite government borrowing and spending, for the second and third quarter of the year, there has been a decline in economic activity which spells recession. It also signals that unemployment figures which in the first part of the year looked robust will also be affected. To get a sense of what this all means, News Five’s Isani Cayetano spoke to the private sector senator Mark Lizarraga and we get the feel from the streets. Here is that story.

Isani Cayetano, Reporting

The contraction of Belize’s economy in the third quarter of 2019 raises serious concerns about the overall performance of the country, as it relates to the gross domestic product.  When compared to last year, during the period July to September, GDP fell by 0.4%.  The reduction in economic activity is attributed to a decrease in production in the primary sector where banana production and marine exports are down by 4.3%.  Notwithstanding the sharp decline, the Statistical Institute of Belize reports that government’s services grew by 4.6% in the tertiary sector.

Mark Lizarraga, Senator, Business Community

“Government services continue to play a big role in these indicators.  Government’s borrowing and spending on what they call government services.  And I think that the government has been driving our economy for too long.  We know that many of our main industries have not been performing well.  We know that our exports have been falling continually and we know that our imports have been rising.  So our trade imbalance has been growing and that is not healthy in any economy.”

The unevenness of emphasis on goods and services that are exported, against those that are brought in from outside of the country is also a sign that there is a growing deficit.  But is the country’s income, less its foreign investments, an accurate depiction in light of the fact that Belize imports considerably more than it produces?

Mark Lizarraga

“GDP, to me, is an excellent indicator of the economy’s size.  But we have relied too much on GDP growth and GDP measurements, partially because it’s easy, it’s an easy indicator to measure and quantify the production of goods and services.  But I believe that there are other measurements that we need to start using in our country to measure the welfare of our people because GDP is not a very good indicator of the welfare of your country.”

On September twenty-first, Prime Minister Dean Barrow, in addressing the nation on Independence Day, touched on that very distinction.

Prime Minister Dean Barrow [File: September 21st, 2019]

“Growth and development, however, have always been recognized as two different things.  One does not necessarily include the other and in fact they can sometimes sharply diverge.  When Belize therefore experiences a happy confluence of growth and development proceeding in tandem; of increased GDP resulting in increased jobs; of more people being put to work and lifted out of poverty, it is indeed a conjucture of which we can be proud.”

But that was before actual figures for the third quarter were tallied.

Mark Lizarraga

“So he recognizes that all this growth in GDP that we’ve seen does not necessarily translate into increased jobs, more people being put to work or more people lifted out of poverty.  These are the prime minister’s words.”

In that very address, PM Barrow also acknowledged that despite an unusual GDP growth of 5.2% between January and March, economic activity began experiencing a decline in the subsequent three-month period.

Prime Minister Dean Barrow [File: September 21st, 2019]

“Admittedly, the second quarter GDP greatly lagged the first quarter and an actual decline of 0.8% was recorded.  But when the two quarters are put together, in aggregate we are still much ahead of par and much ahead of peers in the region.”

Defined as a period of temporary economic decline during which trade and industrial activity are reduced and generally identified by a fall in GDP in two successive quarters, Belize’s economy is in recession.

Mark Lizarraga

“And we can see by the latest employment numbers that came out that unemployment has risen and we have a large number of people in our country that remain unemployed and underemployed.  So the formula is not working.  We’ve seen economic growth, yes we’ve seen a downturn in this quarter, but more importantly is what has the economy been doing for Belizeans?”

To get an answer, we turned to the streets of the Old Capital.

Kadisha Baptist, Belize City Resident

“Ih kinda affordable, it depends pan yoh job weh yoh have.  But it is expensive, especially if yoh have kids and yoh haftu pay rent, pay light and everything.  Ih very costly, especially if yoh noh have a good job.”

Channel 5

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