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Belize has dug itself out of a recession, but can it be sustained?

According to the Central Bank of Belize, the economy is expected to grow by approximately two point four percent in real terms during 2017. This comes after Belize’s economy slumped into a recession during the second half of 2016, at this point we would have finally managed to dig ourselves out of that recession with the GDP being positive for two consecutive quarters of 2017. 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. Love News spoke with Dr. Leroy Almendarez, Assistant Professor in the Faculty of Management and Social Sciences at the University of Belize who explained the meaning of a recession

Dr. Leroy Almendarez – Assistant Professor at the University of Belize

“A recession- and it’s best if we tie the whole recession to what is called a business cycle. In a business cycle you have a period of growth and just like any cycle how long this lasts really it depends on how economists measure it and those who are targeting it and looking at it and see how long it will last. So the economy is growing that means you have great output, you have employment increasing not unemployment, unemploying is decreasing employment is increasing and so you have a great wealth of the country actually growing. But there is something called where it says that you can also accelerate at a decelerating rate. For example a person who is driving and decides to break as long as they are moving in the same direction that is called deceleration of your speed, so in this case an economy then starts to- because the figures will tell you and we’re talking about real growth here and when we talk about real growth we are talking about the prices, the prices are not based on inflation because the price levels are increasing and so you find out an economy is accelerating it starts to slow down and then it peaks, it can actually peak and when it peaks that is the point at which growth might be equal to zero. Now it can continue to accelerate at an accelerated growth meaning that if it grows 2% or 3% but then an economy can also go into a period of contraction. Contraction which means now you have output declining and output could be from any of our sectors, it’s the private sector that really produces and sells and so therefore if you have the private sector for some reason you notice the changes and you notice this growth is being reduced and so you can have contraction that is also a part of the business cycle and that contraction is referred to as a recession.”

Belize’s state of its economy largely depend on its trading partners such as the United States of America, which is Belize’s largest exporter, and even though we were spared the wrath of Hurricane Harvey, Dr. Almendarez, said that we can still suffer from its effects.

Dr. Leroy Almendarez – Assistant Professor at the University of Belize

“We live in a globalized market place and so and I’m sure that a lot of people have now been talking about globalization and globalization simply means that barriers have been reduced and we live in a wireless world so we are all interconnected. So and through that interconnection it means that we do business with each other. Let’s take the United States our largest trading partner who has been affected by Harvey and Irma and the fact that now they have to be going to parliament to try to get money to finance the recovery process, there is a recovery process there. Is their focus more domestic or international it has to be more domestic. You have Canada we do business with Canada they are a smaller economy and so and then you have CARICOM think about it now Barbuda, Dominica was hit yesterday by Maria and therefore think about now we have to be doing trade within CARICOM. CARICOM is one of the positive trading partners we have.”

Dr. Amendarez said that in order to keep the economy resilient, there needs to be growth and development.

 

Dr. Leroy Almendarez – Assistant Professor at the University of Belize

“It’s not only growth, its growth and development because if you have growth and development then that’s better reflected in the social well-being of a people. If it’s reflected in the social well-being of a people then you can see for example again more jobs being created and of course we can’t just only focus on being employed by others entrepreneurship still has to become a big part of this small business development and so the possibility of going back into a recession it exists.”

According to the Central Bank, the economy is expected to remain buoyant going into the new year 2018.  In this regard, the Central Bank encourages the general public to support the fixed exchange rate by avoiding personal hoarding and by selling any foreign currency that has been earned from exports or from tourism activity to the domestic banks.