A comprehensive look at the growing Belize economy in 2024. Luigi Wewege examines growth drivers, emerging sectors, legal framework, and environmental leadership in this Central American country.
Belize’s economy is experiencing a remarkable transformation, with impressive growth figures and emerging opportunities across multiple sectors. As the economy expands, several key factors are shaping the economic landscape of Belize. In the following FAQ, Luigi Wewege, president of Caye International Bank on Ambergris Caye explores the various elements driving Belize’s current success and future prospects.
A regular contributor to this site, Wewege is well-placed to discuss the Belize economy. He is the author of The Digital Banking Revolution – now in its third edition, and also co-authored economic research examining the accuracy of credit bureau data, that was presented before the United States Congress.
Current Economic Growth and Drivers
In the first half of 2024, Belize’s economy grew by 10%. What’s the driving force behind this?
The Belize economy has been primarily fueled by a resurgence in tourism and a pronounced increase in agricultural exports. The tourism sector has benefited from strategic enhancements to infrastructure and marketing, positioning Belize as an attractive destination within the Caribbean.
Concurrently, the agricultural sector capitalized on favorable international demand, notably for sugarcane and citrus exports. Together, these sectors underscore Belize’s economic resilience and capacity to leverage its natural resources for sustained growth in a globalized market environment.
Emerging Opportunities
What is the potential for new economic sectors in Belize?
Belize holds significant potential to diversify its economy through emerging sectors like trade finance, which could enhance regional trade linkages and leverage its strategic geographic position as a nexus between Central America and the Caribbean.
With growing interest in facilitating cross-border commerce, trade finance could enable Belize to attract foreign direct investment, foster financial innovation, and strengthen its role in regional supply chains. By integrating sophisticated financial instruments to support import-export activities, Belize can strategically position itself as a hub for trade finance, thereby promoting sustainable economic growth and resilience in an increasingly interconnected global economy.
Could Belize take advantage of near-shoring and the US government policies, such as CHIPS?
Belize is well-positioned to leverage emerging trends in near-shoring and capitalize on U.S. policies such as the CHIPS Act, which aim to bolster resilient supply chains and reduce dependency on distant manufacturing hubs. As global enterprises seek proximity to North American markets, Belize’s location and favorable trade agreements provide a compelling proposition for industries considering relocation or expansion.
By fostering an investment climate conducive to high-value manufacturing and technology sectors, Belize can harness these shifts to enhance its role within regional supply chains, attract advanced manufacturing initiatives, and support its own sustainable economic development objectives. Such alignment with U.S. policies not only strengthens bilateral economic ties but also underscores Belize’s adaptability in a dynamic global economy.
Legal Framework and International Appeal
How has Belize’s legal system, influenced its international appeal as an offshore jurisdiction?
Belize’s legal system, grounded in British Common Law, has positioned it as a competitive offshore jurisdiction. The International Business Companies Act, Belize Trusts Act, and modern foundations law offer legal structures that provide confidentiality, asset protection, and certain tax advantages, catering to global investors seeking to safeguard wealth and to try minimizing exposure to external claims.
Asset protection laws, particularly the provisions that limit the enforcement of foreign judgments, create legal barriers that protect assets in Belize from foreign creditors. Despite international pressures for transparency and compliance, Belize has managed to maintain a balance between regulatory conformity, such as adherence to FATF guidelines, and preserving the privacy benefits that attract offshore clients.
Environmental Leadership
In what ways has Belize’s environmental and maritime governance impacted its standing as a regional leader in sustainable tourism and marine conservation?
Belize has earned a reputation as a regional leader in sustainable tourism and marine conservation through its forward-thinking environmental policies and extensive governance efforts. The Belize Barrier Reef, a UNESCO World Heritage Site, is a globally-recognized marine ecosystem that has benefited from progressive maritime and environmental protections. The government’s moratorium on offshore oil drilling in 2017, which was one of the first of its kind in the world, sent a clear signal of Belize’s commitment to preserving its marine biodiversity. Belize has also implemented national strategies to promote ecotourism, with a focus on minimizing environmental degradation while maximizing economic returns for local communities.
Marine governance in Belize is largely facilitated through a mix of local and international collaborations. The Belize Integrated Coastal Zone Management Plan, developed with input from scientific communities, government agencies, and NGOs, is an example of this multi-stakeholder approach to sustainable resource management. The designation of marine protected areas has also played a critical role in maintaining biodiversity, as has Belize’s involvement in international agreements, such as the Convention on Biological Diversity.
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— Central America Living (@VidaAmerica) June 25, 2024
Economic Challenges and Diversification
How does Belize’s economic dependency on international financial services and tourism impact its vulnerability to global economic fluctuations, and what strategies should be employed to diversify its economic portfolio?
Belize’s economy is significantly dependent on two major sectors; international financial services and tourism, both of which are particularly vulnerable to external shocks. The global financial services sector is subject to changing international regulations, market volatility, and geopolitical shifts, while tourism is sensitive to economic cycles, public health crises, and climate change. The 2020 pandemic, for instance, exposed vulnerabilities in Belize’s tourism sector, which contributes to roughly 40% of its GDP and is a primary source of the country’s foreign exchange. Similarly, continually evolving standards from the OECD, EU, and FATF encouraging Belize to enhance its offshore financial services framework, makes it difficult and expense for the country to keep ensuring the long-term sustainability of this economic model.
The over-reliance on these two sectors somewhat increases Belize’s exposure to external risks, making it more susceptible to economic downturns, regulatory changes, and environmental disasters. However, diversification is critical to mitigating these vulnerabilities, and Belize can pursue several strategies to broaden its economic base:
Agricultural Modernization
Belize has a strong agricultural tradition, producing commodities like sugar, bananas, and citrus. That said, the sector requires modernization and investment in value-added processes, such as food processing and agro-industry. Diversifying export markets and focusing on sustainable agricultural practices would not only boost economic resilience but also reduce environmental impacts.
Blue Economy
The sustainable use of Belize’s extensive marine resources could provide a new avenue for growth. The development of the “blue economy” could include sustainable fisheries, aquaculture, and eco-marine products, while also exploring the potential of marine biotechnology and renewable ocean energy.
Renewable Energy
Given Belize’s rich natural resources, investing in renewable energy, particularly solar and wind, could diversify its economy while promoting energy independence. This shift could also position Belize as a leader in green technologies within the Caribbean and Central America, attracting investment and expertise in climate adaptation and mitigation strategies.
Digital Economy and Knowledge-based Services
Belize’s financial services sector could evolve by embracing fintech, blockchain, and digital banking. Encouraging the growth of knowledge-based industries, such as information technology services and education technology, could also diversify the economic base.
Ultimately, Belize’s ability to reduce its vulnerability to external shocks lies in its future capacity to pivot towards sectors that are both sustainable and adaptive to global trends. Diversification would create a more resilient economic framework for long-term growth.
The Belize Economy Moving Forward
The Belize economy is, right now, at an important crossroads. Its demonstrated growth in traditional sectors, combined with strategic opportunities in trade finance, near-shoring, and environmental leadership, presents a clear path toward sustained economic development. While external vulnerabilities require careful management, Belize’s diversification strategies and commitment to sustainable growth suggest strong potential for continued economic resilience and expansion.
