WILLEMSTAD – Curaçao’s tourism performance is influenced not only by the number of flights, hotel capacity and local prices, but also by how well the European economy is performing.
Research by the Centrale Bank van Curaçao en Sint Maarten (CBCS) has found that higher economic growth in the euro area has a positive and statistically significant effect on Curaçao’s tourism earnings.
The finding is part of a study examining quarterly data between 2010 and 2024 to determine how exchange rates and other economic variables influence tourism exports and merchandise imports in Curaçao and Sint Maarten.
According to the researchers, when real gross domestic product in the euro area increases, European residents generally have more disposable income available for discretionary spending, including international travel.
For Curaçao, the result can be felt in two ways.
A stronger European economy can result in more visitors traveling to the island, while tourists who do travel may also spend more money on accommodation, restaurants, entertainment and other activities.
The researchers found the positive relationship between euro-area economic growth and Curaçao tourism earnings to be statistically significant. Although the estimated effect becomes smaller over time, it remains positive and significant through the first quarter following the change.
The finding demonstrates how closely Curaçao’s increasingly tourism-driven economy is connected to economic developments thousands of kilometers away.
The Netherlands alone generated an average 42.1 percent of Curaçao’s tourism foreign exchange earnings during the 2010–2024 period, while the entire euro area accounted for 48.6 percent.
This means developments affecting European household finances can eventually make themselves felt in Curaçao’s hotels, restaurants and other tourism businesses.
The research also found indications that higher inflation in Curaçao can negatively affect tourism exports because it makes the destination relatively more expensive for foreign visitors, although this result did not reach conventional levels of statistical significance.
The study consequently highlights the importance of maintaining Curaçao’s price competitiveness while also monitoring economic developments in the countries from which a large share of its visitors originate.
With tourism now accounting for more than half of Curaçao’s foreign exchange earnings from exports, developments in major source markets have implications that extend well beyond the tourism industry itself.