WILLEMSTAD – The economic growth of Curaçao is under pressure due to the protectionist policies of the U.S. government, according to Richard Doornbosch, president of the Central Bank of Curaçao and Sint Maarten. Doornbosch highlights that the global trade war ignited during Donald Trump’s presidency is affecting Curaçao’s economy, particularly through tourism and import prices.
According to Doornbosch, the trade war has created significant uncertainty among consumers and investors worldwide, slowing economic growth, including in the United States itself. “The main loser is America, as it has long been the largest winner of international trade based on rules,” he stated.
Economic Scenarios and Projections
The Central Bank has assessed the potential impact of U.S. import tariffs through two possible scenarios. In the first scenario, where only the United States imposes tariffs and other countries do not retaliate, the bank forecasts a moderate effect on Curaçao’s economy. The country’s expected economic growth in 2025 would drop from a previously projected 3.2% to 2.9%, while inflation would rise from 2.3% to 2.9%.
The higher inflation would mainly result from more expensive imported goods, directly impacting consumer purchasing power. Doornbosch points out that this would affect not only households but also the tourism sector: “When inflation rises in the United States, it indirectly affects us through higher import prices. This is a risk, as tourism and consumption are highly sensitive to price levels.”
The second scenario assumes that major trading partners, such as China and the European Union, retaliate with countermeasures, escalating into a global trade war. In this case, the U.S. economy would shrink by over 1.5 percentage points compared to previous expectations, and inflation in the U.S. would surge to 4%.
For Curaçao, this scenario would mean a further slowdown in growth, with the economy expected to grow by only 2.6% in 2025—half a percentage point lower than in the base scenario—while inflation would rise to 3.5%. The effects on Sint Maarten would be even more severe, with projected growth dropping to 1.8% and inflation increasing to 3.1%.
Doornbosch stressed that these economic shocks would have broader consequences, not just for domestic spending and tourism, but also for the trade balance. Higher import prices, combined with falling export revenues from tourism, would lead to a growing deficit in the current account of the balance of payments.
In the worst-case scenario, the deficit could reach over 12% of GDP by 2026. Additionally, the monetary union’s import coverage would decline from 4.5 months in 2025 to just 3.3 months by 2028, signaling a weakening of external reserves.
A Structural Risk
Doornbosch sees these tariff measures as not just an isolated issue but a structural risk to the economy: “The biggest damage comes not from the level of tariffs themselves, but from the uncertainty they cause. This uncertainty hampers investment, undermines confidence, and affects long-term economic outlooks.”
Challenges for the U.S. Dollar as a Global Reserve Currency
Another concern is the role of the U.S. dollar as the global reserve currency. Doornbosch notes that, traditionally, investors have flocked to U.S. Treasury bonds in times of uncertainty, driving down interest rates. However, this pattern seems to be shifting. The long-term interest rate on U.S. bonds has increased, while gold prices have risen.
This suggests a decreasing confidence in the U.S. dollar as a safe-haven asset. “The current stance of the U.S. government is raising structural doubts about its willingness to continue fulfilling its role in the global financial system,” he said.
This is particularly relevant for Curaçao and Sint Maarten, both of which have a fixed exchange rate against the U.S. dollar. The peg helps keep inflation low and ensures stability. However, if U.S. interest rates rise, local interest rates would have to follow suit to prevent capital flight.
Doornbosch has emphasized that the peg has worked well for over 50 years. “Even without the dollar as a reserve currency, it remains beneficial for Curaçao and Sint Maarten to maintain the peg as long as the U.S. remains our main trading partner. I don’t foresee any change in this for the time being.”
At the same time, Doornbosch observes that a weakening dollar would give European tourists more purchasing power on the islands, while imports from the U.S. would become more expensive. “We are keeping a close eye on this balance,” he noted.
Trade as a Tool for Peace and Stability
Trade, according to Doornbosch, is not just about economics, but also serves as a tool for peace and stability. This idea stems from the post-World War II era when the United States established a series of international institutions to promote economic cooperation, including the International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO).
Doornbosch warns that abandoning this system could bring risks beyond economic damage: “If international trade is no longer seen as a bridge between countries but as a weapon in geopolitical conflicts, it will erode consumer and investor confidence.”
On Wednesday, the Central Bank will release a new report with updated economic projections, factoring in these scenarios. Doornbosch expects growth to remain positive, but lower than previously forecasted.
