WILLEMSTAD - According to sources close to the government, the Rhuggenaath cabinet was seriously considering a second lockdown in Curaçao from December 21 last. But the government dropped this idea after an advice from the Central Bank (CBCS), which has calculated that such a second lockdown would take the hard-hit Curaçao economy even further into the deep.
“Curaçao has been relatively successful in limiting the spread of Covid-19 during the first wave of the pandemic in the first half of 2020. To this end, the government had taken strict measures, including a total lockdown of six weeks and the closure of the borders for more than three months.
However, these measures have led to a historically deep economic contraction,” the CBCS writes in the advice. According to the latest projection, the economy of Curaçao will shrink by 19.9 percent in 2020 (one fifth).
"The second corona wave hit Curaçao hard, however," the Central Bank said, referring to the recent period, especially at the end of November and the beginning of this month, when the number of contamination cases increased rapidly.
“Since Covid-19 is particularly dangerous for the elderly and people with other medical conditions, the government is considering introducing a second lockdown from December 21, 2020, if the current measures do not result in a decrease in the number of active cases.”
It did not come that far. And currently the numbers are also decreasing. However, the danger has not passed. This applies to all countries and islands. The calculation of the CBCS shows that a second lockdown will "further intensify the contraction in 2020". Namely to 22.8 percent (almost a quarter of a decline of the gross domestic product, GDP). Private consumption in particular is expected to decline sharply as it is traditionally relatively high around the holidays.
“Furthermore, a second lockdown will delay the expected recovery in 2021. The longer the lockdown lasts, the greater the negative effect on growth,” the Central Bank continues. Up to now, 5.3 percent growth next year has been considered - which is far from 'making up' for the minus of 2020 - but depending on which scenario, this could well fall back to just 1 percent growth in 2021.
"Also, a second lockdown means greater recourse to the government by companies and individuals for financial support, which will put even greater pressure on public finances," the CBCS warns.
And there are more bleak prospects when Curaçao 'locks' for the second time: “In addition, companies with a second lockdown could decide to stop permanently, which will have an extra negative effect on the economy in the short to medium term.”
Finally, the Central Bank recommends to the government 'to look at how other countries have implemented a second lockdown', which may be less damaging to the economy and society yet has been effective in reducing number of infections.