WILLEMSTAD – Curaçao could make its economy more resilient to international price and currency shocks by making it easier for businesses to purchase goods from a broader range of countries, according to research by the Centrale Bank van Curaçao en Sint Maarten (CBCS).
The recommendation follows an analysis of how fluctuations in the euro affect merchandise imports into Curaçao and Sint Maarten.
Curaçao remains highly dependent on imported goods because of its limited domestic production capacity. Food, clothing, petroleum products and construction materials are among the merchandise categories that must largely be sourced abroad.
Over the 2010–2024 period analyzed in the study, merchandise imports represented about one-third of Curaçao’s gross domestic product. The researchers describe import dependence as one of the characteristics that makes small island economies particularly vulnerable to external developments.
The United States is Curaçao’s largest source of merchandise imports, accounting for an average 36.1 percent during the period studied. The euro area accounted for 16.9 percent. For Sint Maarten, the U.S. share was considerably higher at 51.7 percent, while the euro area accounted for 7.7 percent.
The exchange rate nevertheless matters. Because the Caribbean guilder is tied to the U.S. dollar, an appreciation of the euro makes European products more expensive in local currency.
The CBCS study found a clear response among Curaçao importers. A 1 percent appreciation of the euro was associated with an immediate 1.07 percent decline in merchandise imports from the euro area.
This suggests businesses can respond to higher European prices by reducing purchases from the euro area and sourcing products elsewhere.
The researchers therefore point to import diversification as a way to strengthen Curaçao’s resilience. Reducing logistical, regulatory and informational barriers to sourcing goods from alternative markets could give local businesses greater flexibility when products from one region become more expensive.
A more diversified supplier network could also help contain imported inflation and reduce the economic impact of disruptions affecting individual trading partners.
For Curaçao consumers, the issue ultimately concerns more than international trade statistics. An economy that imports a large share of what it consumes remains exposed to exchange rates, transportation costs, global commodity prices and disruptions in international supply chains.
Expanding the number of markets from which Curaçao can efficiently source goods could therefore provide businesses and consumers with a larger buffer when international conditions change.