Belize Economic Forecast

GDP growth eased to 10.5% year on year in Q4 (Q3: +14.8% yoy). The result was driven by a softer expansion in services activity amid lower growth in tourist arrivals—which remained below their pre-pandemic level. Moreover, agricultural output contracted at the same pace as in Q3 due to a decline in banana and cattle production. That said, growth in industrial output accelerated to more than double the pace of Q3 due to healthy construction activity and electricity generation. Turning to Q1, available data paints a downbeat picture: Price pressures remained stubbornly elevated in Q1, and exports revenue decreased by 20.9% year-on-year amid plummeting banana and sugar exports. However, in Q1, overnight tourist arrivals jumped 46.5% yoy, reaching 90.6% of their Q1 2019 level. This ongoing recovery bodes well for services activity in both Q1 and the year as a whole.

Inflation softened to 6.1% in March from 6.5% in February, while month-on-month inflation eased from a 10-month high in February. This year, tighter monetary policy and a base effect will soften price pressures. The depreciation of the U.S. dollar—the Belizean dollar is pegged to the USD— is an upside risk, as it would increase the cost of imports.