WILLEMSTAD – Raising the AOV would stimulate household spending and modestly increase economic growth, while having little impact on inflation, according to the Central Bank’s projections .
The analysis shows that pensioners tend to spend a large share of additional income on basic necessities, leading to an immediate increase in consumption. As a result, economic growth could rise by up to half a percentage point in 2026 under the most generous scenario.
Inflation, however, remains largely unchanged. The Central Bank attributes this to Curaçao’s high import dependency, which means domestic demand has limited influence on prices. Employment effects are also modest, with unemployment declining slightly as economic activity increases.
These positive effects, the report cautions, are temporary. By 2029, growth rates return to baseline levels, while the structural costs of higher pensions remain.
