Posted: Tuesday, May 26, 2020. 2:43 pm CST.
The views expressed in this article are those of the writer and not necessarily those of Breaking Belize News.
By John Saldivar MSc (Econ):
Since March 2020, the Belize economy has come to almost a grinding halt as a consequence of the worldwide pandemic COVID-19. Tourism, the mainstay of the economy, collapsed immediately after the closing of the international airport and with it has gone over fifteen thousand jobs and millions in foreign exchange. The subsequent lockdown of the entire country with State of Emergency movement and business opening restrictions has resulted in a region-leading successful fight against the pandemic. However, this has precipitated further massive loss of jobs and government revenue. Public finances have collapsed to ten percent of projections the last two months and COVID-19 relief efforts have prompted massive local borrowing with the anticipation of even more international borrowing as multilateral assistance comes on stream. With major debt servicing obligations falling due shortly, a debt crisis is looming. And with tens of thousands already out of a job and more to come, social collapse is staring the country in its face unless urgent economic recovery measures are implemented to stimulate the economy, create new industries, buttress existing ones, and create new jobs. We must now focus on the economic recovery of our country. People need help, jobs need to be created, industries need to be established, our economy needs to be rebuilt.
SHORT TERM GLOBAL ECONOMIC OUTLOOK
Depending on which timeline is followed, the world and more importantly our major trading partners can expect to be safely out of this pandemic in anywhere between six to eighteen months by which time hopefully a vaccine will be developed. With public health experts predicting second and third waves of the virus in major economies like China and the United States, it might be safe to assume the outer limit of 18 months for our trading partners to bring this pandemic under control.
The International Monetary Fund (IMF) in its April World Global Report acknowledges that “the pandemic is inflicting high and rising human costs worldwide, and the necessary protection measures are severely impacting economic activity.” According to this Report, the global economy is projected to contract sharply by three percent in 2020 but return to grow by five point eight percent in 2021 “assuming that the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound.” The Report identifies the need for policymakers to “implement substantial targeted fiscal, monetary, and financial market measures to support affected households and businesses domestically.” It goes on to acknowledge, quite introspectively, that “strong multilateral cooperation is essential to overcome the effects of the pandemic, including to help financially constrained countries facing twin health and funding shocks, and for channeling aid to countries with weak health care systems.” It is therefore anticipated that the convening of a forum to discuss the contribution of the multi-laterals to the economic recovery of member developing nations is imminent. We must be ready with our Plan already long underway.
THE FIVE PILLARS OF THE NEW BELIZE ECONOMY
One thing is for certain, even if Belize is able to control the spread of the virus within our borders as we appear to be doing, it is clear that our neighbors especially the two to the north who are our major trading partners, are far off from bringing this virus under control. This means that even as we try to return to some normalcy in Belize, it will be some time before we can safely open our borders for visitors. Economic recovery at least for the next twelve months will therefore have to be mostly internally driven.
The five (5) pillars of our economic recovery plan can include:
Agriculture – to be covered in Part II
Infrastructure and Construction – to be covered in Part III
Industry Expansion – to be covered in Part IV
Digitization – to be covered in Part V
Tourism – to be covered in Part VI.
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