Belize: Selected Issues
IMF Staff Country Reports, May 11, 2023
Source details
- Canonical URL
- Belize: Selected Issues
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Bibliographic details
- Published: May 11, 2023
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400242281.002
Main findings on inflation dynamics
- The paper studies inflation dynamics in Belize with the goal of quantifying the role of external and domestic factors in the recent inflationary episode and projecting inflation going forward.
- A Principal Component Analysis (PCA) applied to inflation data of several countries finds that global factors have contributed substantially to both the historical variation and the recent surge in Belize’s inflation.
- Global factors explain most of the recent surge in inflation in Belize and are projected to reduce inflation going forward.
- An estimated Phillips curve finds that external factors, proxied by food and fuel prices and US inflation, have been a key driver in the surge in Belize’s inflation during the last two years.
- The estimation results show that external factors have significant effects on Belize’s inflation.
Methodology and indicators used
- Principal Component Analysis (PCA) on multi-country inflation series to extract global factors.
- Phillips curve estimation for Belize incorporating:
- food prices (proxy for external food-price shocks),
- fuel prices (proxy for external energy shocks),
- US inflation (proxy for foreign inflationary pressure).
Policy-relevant implications (from findings)
- Because global factors explain most of the recent inflation surge, domestic policy responses should account for significant externally driven inflationary pressures.
- Projections indicate that global factors are expected to reduce inflation going forward, implying a potential easing of externally driven inflationary pressure over the projection horizon.
Content in this bundle
- Belize: Selected Issues; IMF Country Report No. 23/165; April 18, 2023