Forecast revised amid tightening global conditions
WILLEMSTAD, PHILIPSBURG - The Centrale Bank van Curaçao en Sint Maarten (CBCS) expects economic growth to moderate across the monetary union in 2023, consistent with an expected slowdown in the economies of both countries’ main trading partners, notably the United States and the Netherlands. “Curaçao’s real GDP is expected to expand by 3.2% and Sint Maarten’s by 2.3%,” stated CBCS President Richard Doornbosch in the Bank’s March Economic Bulletin. “Meanwhile, inflation will subside in both countries due primarily to a projected decline in global oil prices,” he added.
The 2023 growth forecast for Curacao was revised up by 0.5 percentage point compared to the outlook of December 2022 as the previously expected negative effect of a decline in seat capacity on flights from the Netherlands during the first quarter of 2023 on stay-over tourism and, consequently, real GDP growth, seems to be negligible. So far, the decline in the number of visitors from Europe has been compensated by an increase in stay-over arrivals from other source countries. In particular the number of visitors from North America, i.e., the United States has been showing a sharp increase. “Curaçao’s projected real GDP expansion in 2023 is sustained by an increase in domestic demand while net foreign demand will decrease. The gain in domestic demand is led by higher private investments in the utilities, real estate, tourism, and ship repair industries in particular, moderated by declines in private consumption because of the still elevated inflation and public demand,” the CBCS president explained. “Despite the growth in exports supported by the favorable tourism outlook, net foreign demand is projected to drop because of a stronger increase in imports reflecting higher domestic and tourism spending,” he pointed out.
“Sint Maarten’s real GDP growth forecast, by contrast, has been adjusted downward by 1.0 percentage point from the previous outlook due primarily to stronger import growth,” Doornbosch explained. “Similar to Curaçao, the projected real economic expansion in Sint Maarten in 2023 is driven by higher domestic demand sustained primarily by stronger private investments reflecting the catch up of delays in the reconstruction of the Princess Juliana International Airport and the construction of the new general hospital, complemented by new construction projects at Indigo Bay and the Great Bay harbor area.”
He added that although to a lesser extent, government spending will also increase. “By contrast, private consumption is projected to decrease due to the still high inflation. The stronger investment and tourism-related imports will surpass the growth in exports owing to the positive tourism outlook, resulting in a decline in net foreign demand, “ the CBCS president concluded.
