Friday, November 11, 2011


Well to tell the truth, it doesn´t mean much of anything! The number is very important though. In 2011 our GDP , or Growth Domestic Product was 2.5. Now I´m an amateur, I´ve absorbed a lot about economics, but have no formal training. What I can tell you from 40 years of observing GDP numbers in our small country of Belize, is that in my opinion. When the GDP number is 3.2, we seem to be holding level. When it is above that, things are moving good. When we are below GDP 3.2, times are hard.
There are a lot of permutations to the GDP in our government and in our society. To make it simple as I understand it, the GDP number tells us basically in the most simple terms, where we stand as to infra-structure, government management, and ability to do so many things. It is a reflection of how much revenue in taxes our government can take from the economy.
GDP 3.2 means we are stable, stagnant, and holding our own, according to the needs of an expanding population growth. Our population growth is not stagnant. It expands continuously. A GDP of 3.2 means we are building enough school classrooms, staying level with house construction for new generations of births, constructing enough bridges, highways and streets, maintaining police services, providing land titles, and doing other things that have to be done. Below GDP 3.2, we are NOT keeping up with the demands of our population growth needs. Nor can we! Our government revenues come from taxes, earned directly, or as by-products of exports, or incoming tourism dollars. To start to feel comfortable as a nation, we need a little extra. A GDP of 3.5 or 3.6 is that number. Countries that have GDP rates of 6, or 9, or 11, do fantastically. Their governments have money coming out of their ears. They build bullet trains going 300 mph, or vast bus networks, or cover their country with roads and establish more and more universities. Or like China start building a space station and plan a colony on the moon. They can afford it.
What this amateur understands after 40 years of observation, is that in Belize the population growth dictates the revenues what the government needs and that those revenues are dictated to be EVEN when our GDP is at 3.2. Below that, we are behind the curve and strapped for enough money. Currently our GDP places our needs behind the curve at 2.5. We need either more tourists, or more quality revenue earning exports. The population is growing faster than our GDP can handle.
The previous PUP government tried a rather simple minded, but idiotic move, in which they raised the GDP in Belize over 4.0 The good times were here. Unfortunately, they had plans in the political party to steal the money and what they did, is BORROW foreign loans. The subsequent spending moved the BELIZE GDP sky high, as the government spent money like there was no tomorrow. NOW the next few generations of children have to grow up and pay for that and in any stupid BOOM and BUST cycle, our GDP is 2.5, BELOW that needed on the curve, demanded by the continuous population growth. We learned GDP numbers can be manipulated by the government borrowing and spending. Government spending can artificially boost GDP numbers. It will however have a reaction and reverse when the loans must be paid back.

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