WILLEMSTAD/PHILIPSBURG –Curaçao’s real GDP growth accelerated from 4.2% in 2023 to 5.4% in 2024 while Sint Maarten’s growth slowed down from 3.8% in 2023 to 3.1% in 2024, according to the latest estimates in the December 2024 Economic Bulletin of the Centrale Bank van Curaçao en Sint Maarten (CBCS). The developments over the first half of 2024 indicate that the accommodation & food service activities and construction sectors served as the main drivers of growth across the monetary union.
The increase in the accommodation & food services activities sector was consistent with a rise in tourist arrivals in both Curaçao and Sint Maarten. On the expenditure side, Curaçao’s real GDP expansion in 2024 was mainly driven by a rise in private demand as investments in commercial, residential, and renewable energy projects increased, and to a lesser extent, a rise in public and net foreign demand. Public demand went up, driven mainly by higher public consumption, while the increase in net foreign demand was sustained by a gain in exports moderated by a rise in imports.
The economic slowdown in Sint Maarten reflected primarily the completion of large investment projects such as the reconstruction of the Princess Juliana International Airport in 2024. In addition, the electricity disruptions seen throughout 2024 exerted an adverse effect on productivity and overall economic growth. Still, both domestic and net foreign demand contributed positively to Sint Maarten’s real GDP. The growth in domestic demand was driven by both private and public spending. Private investments rose, albeit at a slower pace than in the previous year, sustained by large investment projects in, among other things, commercial and residential projects. In contrast, private consumption dropped due to higher inflationary pressures. Net foreign demand increased as the rise in exports exceeded the higher import bill.
According to the latest estimates, inflation was 3.1% in both Curaçao and Sint Maarten in 2024. In Curaçao, this represented a decrease from the 3.5% recorded in 2023, while in Sint Maarten, average consumer prices rose at a faster pace compared to the 2.8% in 2023.
Growth set to continue in 2025
Looking ahead, growth is set to continue across the monetary union, although the pace of expansion is expected to decline. In 2025, real GDP will grow by 3.2% in Curaçao, which is supported by both domestic demand and net foreign demand. Meanwhile, in Sint Maarten, an expansion of 2.6% is anticipated, driven by an increase in domestic demand moderated by a decline in net foreign demand.
Growth is expected to continue softening over the medium term across the monetary union, converging to 2.2% in Curaçao and 2.0% in Sint Maarten by 2028. This reflects both economies’ transition to a more sustainable growth trajectory, with private demand as the main driver of growth following the post-pandemic recovery.
International dynamics pose risks to the outlook.
The outlook is subject to significant international risks. That remains broadly unchanged compared to the Economic Bulletin of September 2024. However, the intensity of certain risks has increased. One risk that has intensified is the growing adoption of protectionist trade policies following the U.S. presidential election, which may result in higher import prices and, consequently, higher inflation in both Curaçao and Sint Maarten. Another global risk is a further intensification of geopolitical tensions in the Middle East that could result in new commodity price hikes and restrictions on cross-border movements. In addition, a possible expansion of sanctions on Venezuela following the recent presidential elections in both Venezuela and the U.S. could stifle growth prospects and, hence, lead to increasing social unrest and another wave of migration from Venezuela to Curaçao.
Apart from global risks, Curaçao and Sint Maarten are also exposed to considerable domestic risks. On the upside, the prospect of resumption of economic activities, such as the production of asphalt at the premises of the refinery, could contribute to a higher medium-term growth path for Curaçao. The signing of agreements between potential operators and the government of Curaçao has increased the likelihood of this materializing. On the downside, climate change-related extreme weather events, delays in the execution of structural reforms and public investment programs, and increased concerns on the medium-term financial sustainability of the health care and social insurance systems of Curaçao and Sint Maarten could negatively affect growth in both countries.
The complete text of the December 2024 Economic Bulletin is available on the CBCS website at
https://www.centralbank.cw/publications/economic-bulletins/2024.
International dynamics pose risks to the outlook.
The outlook is subject to significant international risks. That remains broadly unchanged compared to the Economic Bulletin of September 2024. However, the intensity of certain risks has increased. One risk that has intensified is the growing adoption of protectionist trade policies following the U.S. presidential election, which may result in higher import prices and, consequently, higher inflation in both Curaçao and Sint Maarten. Another global risk is a further intensification of geopolitical tensions in the Middle East that could result in new commodity price hikes and restrictions on cross-border movements. In addition, a possible expansion of sanctions on Venezuela following the recent presidential elections in both Venezuela and the U.S. could stifle growth prospects and, hence, lead to increasing social unrest and another wave of migration from Venezuela to Curaçao.
Apart from global risks, Curaçao and Sint Maarten are also exposed to considerable domestic risks. On the upside, the prospect of resumption of economic activities, such as the production of asphalt at the premises of the refinery, could contribute to a higher medium-term growth path for Curaçao. The signing of agreements between potential operators and the government of Curaçao has increased the likelihood of this materializing. On the downside, climate change-related extreme weather events, delays in the execution of structural reforms and public investment programs, and increased concerns on the medium-term financial sustainability of the health care and social insurance systems of Curaçao and Sint Maarten could negatively affect growth in both countries.
The complete text of the December 2024 Economic Bulletin is available on the CBCS website at
https://www.centralbank.cw/publications/economic-bulletins/2024.
Willemstad, December 18, 2024
CENTRALE BANK VAN CURACAO EN SINT MAARTEN
