The main pillars of Belize’s open, privately-run economy are tourism, agriculture, and other services. GDP increased by 9.8% to $1.3 billion in 2021 as the country continued to recover from the COVID-19 pandemic. Belize has an estimated 441,471 residents and an area of 8,867 square miles (July 2022 estimate).
Agriculture and seafood exports are included in the primary sector, which grew by 11.2 percent in 2021. Growth was fueled by the recovery of sugarcane and banana production from weather-related damage and the spike in livestock exports following the removal of trade barriers. Domestic export income grew to US $219 million, except for citrus, as they increased for all key commodities.
With $376.5 million, or 35.5% of all imports for the year, the United States remained Belize’s top trading partner and its biggest importer in 2021. With $48.2 million or 13.1% of exports in 2021, the United States is Belize’s third-largest export market after Mexico and the United Kingdom. Other significant trading partners for exports were the European Union and the Caribbean Community, while other significant trading partners for imports included the People’s Republic of China (PRC), Panama, Costa Rica, and other Central American nations (CARICOM).
Belize’s consumer market is among the smallest in Central America and the Caribbean, and it is not as competitive as its neighbors in that region. The high input costs in Belize raise the cost of goods, which affects market value and domestic product pricing. The price of inputs like utilities, fuel, and telecommunication services account for a sizable portion of the comparatively high cost of conducting business. Increasing food and energy prices around the world caused inflation to increase from 0.1 percent in 2020 to 3.2 percent in 2021. Despite a temporary drop in municipal taxes for diesel and fuel subsidies for qualified operators, prices rose significantly in the transport (9.6%) and food and non-alcoholic beverage (4.8%) categories.
Numerous tariffs, including import duties, cost, insurance plus freight (CIF Value), revenue replacement duties (where applicable), general sales tax, and environmental tax, are imposed on imported goods. The percentage of import taxes ranges from 0% to 45%. Duty rates can range from 70 to 120 percent for luxury goods like SUVs, booze, cosmetics, and products that compete with domestic industries. Where relevant, imports are subject to an environmental tax of 3%, except for some foodstuffs and medicines. The 5% Environmental Tax is applied to vehicles. The general sales tax rate is 12.5% and applies to the majority of items.
The geographic advantages of Belize for American firms include its proximity to the US, connections to Central America and the Caribbean, and easy access to US shipping and airlines. Since English is Belize’s official language, doing business with US corporations is made easier. Increasing economic growth, luring foreign investment, and increasing productivity in the private sector are top government priorities. Net foreign direct investment (FDI) into Belize climbed to $152.25 million in 2021, with most of it going into projects connected to tourism, real estate, financial services, hotels, and dining establishments.
Market entry strategy
Foreign investments must comply with the Exchange Control Act and related rules and be registered with the Central Bank of Belize. Owners must get trade permits from the neighborhood city or municipal town council after founding a company, and the business must register for the necessary business and general sales taxes.
U.S. exporters typically access Belize’s market through a local wholesaler or importer who serves as an agent or distributor there. An American-made product often has a distribution chain that includes a U.S. producer or distributor, a local importer or wholesaler (who may also serve as the distributor), a store, and then the customer or consumer.