Economic recovery on track across the monetary union

Although its momentum has eased  


WILLEMSTAD, PHILIPSBURG – “The economies of Curaçao and Sint Maarten continued to recover from the pandemic at the beginning of 2023,” stated president of the Centrale Bank van Curaçao en Sint Maarten (CBCS), Richard Doornbosch, in the CBCS’s September 2023 Economic Bulletin. “The actual figures of the first quarter show that real GDP growth in both countries was driven primarily by increased stay-over and cruise tourism activities. The pace of growth was, however, less pronounced than in the first quarter of 2022,” he explained. “Consistent with the developments in the January – March period, the pace of economic expansion is set to moderate across the monetary union in 2023 and 2024”.  


In the case of Curaçao, the CBCS president outlined that, “growth is projected to slow from 7.9% in 2022 to 3.8% in 2023 and easing further to 3.4% in 2024. The growth forecast for 2023 has been revised up by 0.4 percentage point from the June outlook, induced by a stronger-than-initially expected increase in private investments and a faster uptick of cruise tourism.”  


The projected slowdown of economic growth is more significant for Sint Maarten. “Following an expansion of 9.8% in 2022, growth is expected to fall to 3.9% in 2023 and further to 2.7% in 2024,” Doornbosch explained. “Still, the outlook for 2023 represents an upward adjustment of 0.7 percentage point from June on the account of a stronger projected increase in domestic demand. The increase in domestic demand is attributable mainly to higher private spending benefiting from lower inflation”, he continued.  


Risks to the outlook are significant and skewed to the downside, one being not finalizing a resolution strategy for ENNIA, which could trigger a run-off of international reserves and cause a deep economic and social crisis. Also, while Sint Maarten has concluded its negotiations with the Netherlands regarding the refinancing of the COVID-19 loans, the negotiations between Curaçao and the Dutch State were still going on at the publication date of the Economic Bulletin. No refinancing or refinancing against less favorable conditions for these loans is a major risk to the public finances of Curaçao.  


Other risks to the outlook include a new wave of distress and higher interest rates in the international financial markets due to further monetary policy tightening of major central banks that could dampen growth across the monetary union, spill-over effects of the war in Ukraine, and the occurrence of extreme weather conditions,” the CBCS president added. “Moreover, if a decline in international oil prices is not passed through in local prices, higher inflation and, consequently, a real exchange rate appreciation could affect private consumption and exports, hence, dampening growth. Additional risks that should be considered are the outcome of the Mutual Evaluation Assessment by the CFATF in 2024 and, specifically for Sint Maarten, possible delays in reconstruction projects like the airport”, he concluded.