Belize - Economic Growth After 1985

Economic growth after 1985

After 1986 the Belizean economy improved dramatically, in part because of the adjustment program implemented by the government. These adjustments cut public expenditures and created incentives for diversification of the economy. The country's foreign-exchange receipts from banana and citrus exports multiplied, and tourism became a major contributor to growth. Internal reform coincided with the recovery of the world economy, in particular the revival of the sugar market. Between 1986 and 1990, the Belizean economy grew at an average annual rate of more than 10 percent.

Inflation remained low from 1986 to 1990, averaging 2.8 percent and allowing for an effective depreciation of the Belizean dollar relative to the United States dollar. The positive effect of low inflation on Belize's exports was enhanced by the depreciation of the United States dollar during the second half of the 1980s. The more favorable exchange rate enjoyed by the Belizean dollar was central to the vigorous growth the country experienced during the period.

In 1991 estimates showed growth slowing to an annual rate of less than 5 percent. This deceleration was the result of significant shortfalls in banana production following an outbreak of black sigatoka disease and a reduction in citrus production resulting from bad weather. As in most of the Caribbean, tourism was also affected by the recession in the United States and Britain.

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