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UB Professor talks about recession

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According to the Statistical Institute of Belize, Belize’s Gross Domestic Product (GDP) was up point eight percent for the first quarter and by one point one percent for the second quarter. This is an indicator that the country is finally bouncing back from a recession with the GDP up for the second consecutive quarter in 2017.  Love News spoke with Dr. Leroy Almendarez, Assistant Professor in the Faculty of Management and Social Sciences at the University of Belize.

 

Dr. Leroy Almendarez of the University of Belize

“When it comes to a formula for GDP and it is important that we look at that, here is a formula; its consumption plus investment plus government spending plus exports minus imports and this is for the expenditure side to GDP.”

The Statistical Institute of Belize in April of 2017 recorded unemployment rate at 9%.  Dr. Almendarez explained why the unemployment is high even though the economy is bouncing back from a recession.

 

Dr. Leroy Almendarez of the University of Belize

“One of the things that happens if you see for example that the GDP continues to show some positive growth that growth has to be sustained so anyone monitoring those information wants to know if this will be sustained and once the magnitude of this growth if it’s less than 1% it’s still closer to 0 but it’s still positive growth. Unemployment as much as it’s one of those economic indicators is also referred to as a lagging variable and a lagging variable means that this is what employers will do. Remember when during a recession those who are looking for work have now become really disappointed they go and walk every day it costs them to go and look for a job and so they take themselves out of the labor force and so now those people are called discouraged workers and so they go home. Now that lagging variable called unemployment this is what employers will do, they will shore up what they have, monitor the changes in GDP and at some point in time open themselves to increase employment, remember you were just moving out of a recession and there were still challenges that had to be met and so, therefore, it’s not an immediate thing where suddenly they start employing a whole lot of people. So employment, what you want is spending right you want spending. Because any form of savings because any person because of lack of confidence is saving rather than spending that is called a leakage because it’s not circulating within the economy to create these kinds of monetary changes that we want to ensure that really people can see that there is consumer confidence. The largest part of that whole formula is consumer expenditure and if that declines that tells you immediately that the GDP will decline.”

Dr. Almendarez went on to say that not because unemployment is still high means that the country is not out of a recession, it is a lagging variable. What employers tend to do, Almendarez said, is to focus internally, thereafter, they start to re-hire.

 

 

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