Since gaining independence from the United Kingdom in 1981, Belize has experienced a peaceful and democratic transition, with power alternating between two major parties, the United Democratic Party (UDP) and the People's United Party (PUP). However, a long-standing territorial dispute with its neighbor Guatemala has not yet been resolved. In December 2008, both countries agreed to refer the dispute to the International Court of Justice (ICJ), requiring referenda in both Belize and Guatemala which to date have not been carried out.
The country's global comparative advantage is derived from its natural resource base, which supports the tourism and agriculture sectors, and its advantageous geographical proximity to major markets. Belize's main development challenges are rooted in its high vulnerability to external shocks, including terms of trade, natural hazards and impacts of climate change, while the government's ability to address these challenges is constrained by high debt levels and limited fiscal space.
Although Belize's economy has traditionally been oriented toward agriculture, the services sector grew in importance during the 1990s and has been by far the largest contributor, accounting for 60% of GDP. The agricultural sector, which accounts for around 10% of GDP but over 50% of total exports, is dominated by the sugar and citrus industries.
As a lower middle-income country, Belize was adversely impacted by the global economic crisis, which came on the heels of the 2008 food and fuel price increases, leading to a slowdown in growth and an increase in poverty. The latest Country Poverty Assessment showed that during the 2002-2009 period, the overall poverty rate increased from 34% to 41%, while extreme poverty increased from 11% to 16%.
Growth resumed in 2010, reaching 2.9%, buoyed by an increase in electricity production. However, high debt levels (83.5% in 2010) and increasing fiscal pressures remain a persistent challenge for policymakers. The IMF estimates GDP growth for 2011 at 2.5%, and estimations for 2012 are being revised downwards from 3.0% to 2.7%. The latest data from the Statistical Institute of Belize shows GDP returned to positive growth in the third quarter of 2011, after contracting in the second quarter.