Economic rebound does not ensure sustained economic recovery

WILLEMSTAD/PHILIPSBURG – Real GDP of Curaçao will increase marginally by 0.1% in 2021 but will accelerate to 6.2% in 2022. The outlook for Sint Maarten is more positive with a real GDP expansion of 3.4% in 2021 followed by an increase of 14.4% in 2022. In both countries, the economic recovery is supported primarily by a pickup in tourism activities. “The economic rebound does, however, not ensure sustained economic recovery”, warned president of the Centrale Bank van Curaçao en Sint Maarten (CBCS), Richard Doornbosch, in the Bank’s latest Quarterly Bulletin. “Because the latest available data are in line with the assumptions made for the July update of the economic outlook of the CBCS, the growth projections remained unchanged”, explained Doornbosch further.

“Inflation is projected to surge in 2021 to 2.9% in Curaçao and 2.0% in Sint Maarten amid the rising international oil prices and worldwide supply chain disruptions. These developments translate directly into our domestic prices given our high import dependency. Expectations are that inflationary pressures will abate somewhat in 2022”, he continued. Besides the outlook for 2021 and 2022, the Quarterly Bulletin provides an analysis of the economic developments during the first quarter of 2021.

This analysis reveals that real GDP continued to contract sharply across the Monetary Union in the first quarter of 2021 amid the COVID-19 pandemic and related containment measures compared to the partially pre-COVID first quarter of 2020. Real GDP fell by 13.0% in Curaçao, while Sint Maarten recorded a contraction of 22.1%. The deep economic contraction in both countries was underpinned by a sharp decline in net foreign demand combined with lower domestic demand. An analysis by sector reveals that real value added shrank in most sectors of the economies of Curaçao and Sint Maarten but was the most pronounced in the restaurants & hotels, wholesale & retail trade, transport, storage, & communication, and real estate, renting, & business activities sectors.

The contraction in the restaurants & hotels sector was deeper in the first quarter of 2021 compared to the first quarter of 2020 as tourism in both Curaçao and Sint Maarten was performing relatively well in January and February 2020, i.e., before the pandemic. In both countries, travel and entry requirements combined with health guidelines and containment measures amid the pandemic had a negative impact on stay-over tourism during the first quarter of 2021. Furthermore, the negative travel advice for Curaçao issued by the Dutch government that was in place in the January–March period of 2021 had a significant negative effect on the country’s stay-over tourism.

Against this background, the number of stay-over visitors, the number of visitor nights, and the hotel occupancy rate dropped considerably across the Monetary Union. Furthermore, cruise tourism remained practically nonexistent in Curaçao and Sint Maarten following the industry’s shutdown due to the COVID-19 pandemic. The negative outcome of the wholesale & retail trade sector was caused by the decline in domestic demand and lower tourism spending. Consistent with the sharp decline in tourism activities, real value added fell significantly in the real estate, renting, & business activities sector.

The dismal performance of the transport, storage, & communication sector was ascribable to a decline in both airport-related and harbor activities. Activities at the airport shrank due to a decline in the number of commercial landings and passenger traffic. Also, transportation services provided by the domestic airlines dropped. Meanwhile, the disappointing performance of the harbors reflected a decline in the number of ships piloted into the ports of Willemstad and Phillipsburg, notably cruise ships and tankers, and fewer container movements. Doornbosch indicated that before the outbreak of COVID-19, growth already was below its potential in both Curaçao and Sint Maarten.

“This underperformance was ascribable largely to our macroeconomic weaknesses including the functioning of the capital and labor markets, complex administrative procedures, and high cost of doing businesses. If these macroeconomic weaknesses are not addressed effectively, there is a significant risk of return to low-growth paths in the medium term”, he warned. At the same time, the governments of Curaçao and Sint Maarten are facing challenges in the public finances with rising current budget deficits and public debt aggravated by the COVID-19 pandemic.

“The reforms that have been agreed upon with the Dutch government in the country packages give the countries the opportunity with technical and financial support to address these weaknesses and thereby improve the investment climate, bolster private investments, and achieve a higher sustainable economic growth path”, Doornbosch explained. “At the same time, measures should be taken to improve the fiscal situation including tax reform and reform of the health and social systems of Curaçao and Sint Maarten. A critical success factor for achieving growth friendly fiscal consolidation is the development of a multiannual budgetary framework, which will facilitate monitoring the reform progress and provide much needed certainty on the financial envelope available”, Doornbosch concluded. The complete text of the Report of the President and the Quarterly Bulletin can be viewed on the

CBCS’s website at