Belize’s economy is small, open and diverse, reliant heavily on international trade for sustenance.
Belize utilizes English Common Law supplemented with local legislation and regulations that do not discriminate against foreign investments. Foreign owners of businesses may qualify for incentives as well as have the right to private property rights.
Tourism is an essential industry and its rebound from COVID-19 restrictions has resulted in increased stay-over and cruise arrivals.
Agriculture
Belize has a small economy driven primarily by agriculture, tourism and services. Rice is produced on large mechanized farms located within the Belize River Valley while corn, roots and tubers, red kidney beans are raised on smaller plots scattered throughout the country. Agriculture accounts for 19% of GDP while sugar exports account for two thirds.
Belize’s economy has been driven by its natural resources, making it one of the leading sugar producers worldwide. Tourism also plays an integral part in Belize’s economy bringing in over one billion dollars yearly in revenue.
Belize’s economy relies heavily on international trade, so ensuring a stable macroeconomic environment is of vital importance for sustaining its development. As part of CARICOM, foreign, economic and trade policies are coordinated regionally while import tariffs are determined by CEFT.
Belize’s economy boasts a small domestic market but boasts an active manufacturing sector that accounts for almost one-eighth of GNP. Food processing, rum production and furniture-making are among the more notable manufacturing activities undertaken here.
Forestry was Belize’s primary industry until the early 20th century, when manmade dyes in Europe had overshadowed logwood-made dyes as an export commodity. After this happened, loggers turned to mahogany exports as their main industrial export product – this remains their major industrial export today.
Belize boasts an expanding financial services industry that includes offshore banking and a stock exchange. Regulated by the Central Bank of Belize, its banking system maintains close ties to U.S. cities where there is a substantial population of Belizean immigrants living here.
Belize’s constitution and legal code protect property ownership rights, making the country an attractive option for offshore investments. The judiciary system operates independently from executive and legislative branches using English common law as its foundation; internationally-minded investors have taken note of Belize since enacting an International Business Companies Act and Trusts Act in 2012.
Tourism
Belize’s famous island beaches, lush rainforest and Mayan ruins fuel a flourishing tourism industry which accounts for an enormous share of GDP and employment. Tourism remains one of the main economic drivers; however, its success remains subject to external market influences such as commodity price fluctuations or preferential trade agreements with the U.S. or UK for sugar or banana exports.
Our team spent an entire year in Belize talking with people from businesses, agriculture and non-governmental organizations in order to understand how the natural area supports their livelihoods. From this research came recommendations addressing economic needs while protecting critical ecosystems. Specifically, they emphasized the need to emphasize domestic tourism over international tourism as part of building resilience into Belize’s flourishing ecotourism sector; doing so will cushion impacts from volatile international tourism while opening up an entirely new market of visitors who tend to stay longer, spend more money and create local jobs more readily than international visitors do.
Belize boasts a highly skilled, English-speaking workforce equipped with strong technological abilities; however, productivity lags behind that of other Central American nations and it remains to realize its full potential as a knowledge economy.
Though the services sector recovered after COVID-19’s contraction in 2021, challenges still exist across the country: high unemployment and widening income disparity are major concerns. Our team advises accelerating structural reforms and strengthening governance frameworks to increase job creation while simultaneously decreasing crime and overcoming infrastructure bottlenecks.
Belize, with its English common law legal system and laws and regulations specific to Belize, does not place restrictions on foreign investment or ownership. Foreign investors are eligible for incentives; citizens have the right to own private property; contracts are legally binding; regulations can be subject to judicial review – among many other provisions that create an ideal business environment in Belize. Despite such favorable conditions, however, international surveys still rank Belize poorly when it comes to openness to business and ease of doing business.
Business Services
Belize’s service sector holds 59% of GDP and comprises the public sector which employs many Belizeans as well as wholesale and retail trade, tourism, construction and fishing – these sectors combine to account for nearly all employment in Belizean society. Most of the population also have access to electricity, water and telecommunication services.
The state owns and operates Belize’s utilities – with the largest ones being Belize Water Services Limited as the sole water supplier, Belize Electricity Limited as the sole distributor of electricity, and Belize Telemedia Limited providing telephone, cellular phone, internet and other business services across most of Belize regulated by the Public Utilities Commission.
Forestry had long been the economic foundation of Belize until Europeans invented synthetic dyes for logwood production, rendering logging unprofitable and leading them to switch to mahogany that could be used for furniture and cabinetry production. When this decline began, focus shifted toward other areas including cane sugar production, citrus products and banana production.
Belize’s small domestic market and relatively high costs for labor and energy restrict industrial development; however, the government remains welcoming of foreign investments into energy and telecommunication sectors.
Foreign-owned companies now dominate banking, insurance, health care and retail trade sectors – evidenced by significant foreign investment since 1981 that continues to increase exponentially.
The Government is making attempts to stimulate economic growth by freeing up funding for infrastructure projects and encouraging entrepreneurship through an incubator program designed to encourage young people to start their own businesses; so far this initiative has attracted numerous budding entrepreneurs.
As of September 2019, Belize had an estimated total labor force of 191,000 workers with an unemployment rate of 10.4%. However, this rate may rise as COVID-19 pandemic strikes and impacts tourism industry employees as it’s the primary employer in Belize’s economy; nonetheless the Government offers several programs designed to assist those affected by epidemic. Belize relies heavily on international trade with main trading partners being United States, Canada, China Mexico as well as Caricom member nations as its main trading partners.
Manufacturing
In 2021, COVID-19 restrictions were eased which saw tourism and wholesale/retail trade sectors rebound. Together they account for over 50% of Belize’s GDP.
Belize is a small economy that relies heavily on foreign trade for most of its income, making it susceptible to foreign exchange rate fluctuations and external shocks. Due to its proximity with the USA and English-speaking population, Belize has long been considered a desirable tourist destination; additionally, Belize enjoys a favorable trade balance; however high unemployment, large debt burden and widening income disparity remain serious challenges that remain serious obstacles for growth in Belize.
After years of low economic growth, Belizean economy saw rapid expansion during the early 1990s. Under government strategy known as ‘growth economics,” which focused on high-level infrastructure investment and export promotion policies of goods and services. Unfortunately, this approach failed to produce sustainable economic growth and led to the accumulation of public debt; additionally it compromised agricultural export competitiveness, leading to market access preference losses of agricultural products exported out of Belize.
Belize’s economy is open to foreign investment and was host to US$1.4 billion worth of FDI between 2022-2023; most investments went into services, with electronics manufacturing also present.
State ownership of several of Belize’s major enterprises includes national water and electricity utilities as well as telecom providers; private sector ownership of these firms is restricted; with Belize Electricity Limited, Belize Water Services Limited and Belize Telemedia Ltd being majority state-owned enterprises. Belize does not impose capital controls, but does regulate monetary transactions, including foreign currency transactions. Furthermore, its legal system offers protection for investors; labor regulations meet international standards; inspectors advocate on behalf of labor issues while conducting frequent visits and inspections of business facilities; there have been no reports that Belize discriminated against foreign investors; however some have noted cumbersome regulatory processes or an incentive scheme which didn’t always meet their needs.
