WILLEMSTAD – A serious escalation of international trade tensions could reduce Curaçao's economic growth from a projected 2.8 percent to 2.3 percent in 2026 while pushing inflation to 3.0 percent, according to a stress scenario calculated by the Centrale Bank van Curaçao en Sint Maarten (CBCS).
The Central Bank examined two alternative scenarios to determine how continuing U.S. trade restrictions and retaliatory measures by other countries could affect Curaçao and Sint Maarten.
Under the less severe scenario, in which existing tariffs and retaliatory measures remain in place without further escalation, Curaçao's growth would decline from the baseline forecast of 2.8 percent to 2.6 percent.
Inflation would rise from the baseline 2.5 percent to 2.8 percent.
The effects become more significant if trade tensions intensify.
Under the CBCS's further-escalation scenario, Curaçao's growth would fall to 2.3 percent in 2026 and inflation would rise to 3.0 percent.
The negative effects would continue beyond 2026 because weaker global demand, reduced tourism and higher trade-related costs would weigh on the economy.
The consequences would also be visible in the monetary union's external position.
The current-account deficit would increase from 8.1 percent of GDP in the baseline forecast to 8.5 percent under the more severe scenario.
Official reserves would be XCG 42.8 million lower than under the baseline in 2026.
Import coverage would decline to 4.8 months in 2027 and gradually reach 3.9 months by 2030.
Even in that scenario, however, reserves would remain above the three-month benchmark used by the CBCS.
The exercise highlights Curaçao's exposure to decisions made far beyond the island.
Trade restrictions involving major economies can reach Curaçao through higher import prices, weaker international demand, more expensive transportation and changes in tourism.
The CBCS therefore considers international trade tensions a downside risk even though Curaçao is not itself one of the principal parties in the disputes.