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- GDP (PPP):
- $2.8 billion
- 2.5% growth
- 2.0% 5-year compound annual growth
- $8,264 per capita
- Inflation (CPI):
- FDI Inflow:
Belize’s economic freedom score is 57.3, making its economy the 102nd freest in the 2013 Index. Its overall score is 4.6 points worse than last year due to score reductions in nearly all of the 10 economic freedoms that make the country’s decline the most broad-based in the 2013 Index. Belize is ranked 20th out of 29 countries in the South and Central America/Caribbean region.
Belize’s efforts at economic reform have been patchy, and economic freedom has not advanced over the past two decades. Economic dynamism is constrained by institutional weaknesses that undermine prospects for long-term broad-based economic development. In particular, the judicial system remains inefficient and vulnerable to political interference. Corruption, perceived as widespread, severely undermines entrepreneurial dynamism.
The overall regulatory framework has been evolving gradually to ease burdens on the private sector and encourage employment growth, and Belize has benefited from a comparatively high degree of trade freedom. However, dynamic economic gains from trade are undercut by the lack of progress in reforming financial services and investment, both of which are critical to sustaining open markets.
Belize is a parliamentary democracy and member of the British Commonwealth. Prime Minister Dean Barrow of the ruling United Democratic Party won re-election for a five-year term in legislative and municipal elections held in March 2012, more than a year earlier than constitutionally mandated. Since taking office in 2008, Barrow’s government has undermined foreign direct investment by expropriating Belize’s commercial “crown jewels” (the leading private telecommunications and electricity companies, owned by U.K. and Canadian investors, as well as the water company) and establishing close relations with Venezuelan President Hugo Chávez. High public-sector debt leaves little fiscal room for the government to maneuver. Tourism and agriculture are the leading economic sectors. Belize is plagued by crime, including money laundering.
The court system, although constitutionally independent, is often influenced by the executive. Expropriation of personal property is relatively rare, but the current government has expropriated major private foreign-owned electricity and telecommunications companies since taking office in 2008 and as of January 2012 had not compensated investors affected by the nationalizations. Corruption is seen as widespread.
The top income and corporate tax rates are 25 percent; petroleum profits are taxed at 40 percent. Other taxes include a goods and services tax and a stamp duty. The overall tax burden amounts to 23.1 percent of total domestic income. Government spending amounts to 30.2 percent of GDP. Public debt has fallen below 80 percent of GDP due to reductions in budget deficits, but falling oil revenues threaten the fiscal outlook.
Launching a business still costs about half the level of average annual income, but there is no minimum capital requirement. Getting all the necessary permits takes more than 70 days. Despite flexible employment regulations, a formal labor market has not fully developed. Inflation has been relatively low and stable. Below-production-cost price controls have been imposed on the electric company since its expropriation by the state.
The trade-weighted average tariff is 6.4 percent, and non-tariff barriers raise the overall cost of trade. The government has moved to expropriate businesses, including Belize Telemedia and Belize Electricity Limited, decreasing the country’s attractiveness to foreign investors. The state influences credit allocation through quasi-government banks. The small financial sector has been largely immune to the global financial turmoil.