WILLEMSTAD, PHILIPSBURG - Following a deep contraction in 2020 brought on by the COVID-19 pandemic and related strict containment measures, the Centrale Bank van Curaçao en Sint Maarten (CBCS) estimates in its June 2022 Economic Bulletin that economic activity rebounded strongly across the monetary union in 2021, with real GDP growing by 5.0% in Curaçao and 8.6% in Sint Maarten. “The strong economic rebound was driven primarily by a sustained pick-up in stay-over tourism, especially in the second half of 2021. Stay-over tourism arrivals in both Curaçao and Sint Maarten recovered at a much faster pace than initially expected as containment measures, among other things, were gradually eased,” noted CBCS president Richard Doornbosch. “The 2021 growth estimate therefore represents a significant upward revision from the real GDP expansion of 2.0% for Curaçao and 4.5% for Sint Maarten presented in the March 2022 Economic Bulletin,” he pointed out.
“Furthermore, the CBCS’s latest projections indicate that economic recovery will continue across the monetary union in 2022. In both Curaçao and Sint Maarten, economic growth will be underpinned largely by a sustained recovery of tourism activities, including the normalization of cruise tourism, and increased private investments, such as commercial and residential projects,” Doornbosch explained. “The outlook is clouded, however, by heightened geopolitical tensions because of the war in Ukraine, which is exerting further upward pressure on already elevated commodity prices in international markets. As Curaçao and Sint Maarten are highly dependent on imports, higher import prices will push up inflation and, consequently, curb purchasing power across the monetary union,” the CBCS president cautioned. It is against this background the CBCS revised its 2022 growth forecast downward for Curaçao and Sint Maarten to 5.2% and 6.2%, respectively, from the outlook presented in March 2022. Meanwhile, inflation in Curaçao is expected to rise significantly from 2.2% in 2021 to 6.1% in 2022. In Sint Maarten also, inflation is projected to accelerate to 5.9% in 2022 from 2.8% in 2021.
Additionally, the CBCS expects that the pace of recovery will moderate somewhat over the medium term. For 2023, a real GDP growth of 3.0% is projected for Curaçao and 3.9% for Sint Maarten. Although still elevated, inflationary pressures are expected to dissipate in 2023, consistent with lower projected inflation in the monetary union’s main trading partner, the United States. “In line with the projected economic growth, the fiscal stance in both countries is expected to improve, with the fiscal deficit and debt-to-GDP ratio gradually declining over the medium term,” CBCS president Richard Doornbosch concluded.