WILLEMSTAD/PHILIPSBURG:--- Following robust growth in 2025, economic activity is expected to continue expanding in 2026. However, the recent escalation in geopolitical tensions, particularly the ongoing conflict in the Middle East and its potential spillovers to commodity and financial markets, pose increasing risks to the outlook. “While the monetary union has demonstrated resilience, the external environment has become more turbulent. This calls for continued vigilance and clear policy priorities,” said Richard Doornbosch, President of the Centrale Bank van Curaçao en Sint Maarten (CBCS), in the March 2026 Economic Bulletin.
Sustained growth with an improved external position
The economies of the monetary union continued to perform strongly in 2025, with real GDP growth reaching 3.9% in Curaçao and 3.4% in Sint Maarten. Growth was driven mainly by strong tourism activity and its spillovers to sectors such as transport, trade, and construction. “The 2025 growth estimates for both countries reflect developments observed during the first three quarters of the year, driven by strong performances in tourism and construction, along with investment in tourism-related, real estate, and government infrastructure projects,” noted Doornbosch.
Looking ahead, growth is expected to remain positive but moderate in 2026, reaching 2.6% in Curaçao and 2.4% in Sint Maarten. In both countries, growth will continue to be supported primarily by tourism and related activities, while domestic demand is expected to remain positive, albeit at a more moderate pace. Inflation is projected to rise slightly in both countries, reflecting higher international oil and transportation costs. “Remarkable is the strengthening of the current account of the balance of payments with the deficit as percentage of GDP narrowing strongly to single digits for the first time since the inception of the monetary union in 2010, from 16.4% in 2024 to 9.2% in 2025, and to 7.2% of GDP in 2026,” he added.
Heightened geopolitical tensions pose risks to the outlook for the monetary union
However, the current outlook assumes that the conflict in the Middle East does not intensify further into a prolonged disruption. Such a disruption would place additional upward pressure on oil prices, insurance, and freight costs, while dampening domestic demand and tourism activity. “Scenario analyses in the Economic Bulletin indicate that an oil price shock could have substantial
and persistent medium-term effects, leading to lower growth, higher inflation and a decline in gross official reserves,” warned Doornbosch.
Spillovers from other geopolitical developments, including the war in Ukraine and tensions involving the U.S. and Venezuela, continue to pose risks to the outlook. Trade policy uncertainty and the possibility of new tariff measures may weigh on global trade and investment, while slower-than-expected easing by the U.S. Federal Reserve (Fed) could keep global financing conditions tight and dampen capital inflows.
Policy priorities in the face of a turbulent external environment
In response to rising external risks, Doornbosch emphasizes the need for a focused and forward-looking policy agenda to strengthen resilience and support sustainable growth. Especially considering that as small, open, and highly import-dependent economies, both countries are vulnerable to disruptions in global trade, commodity prices, and external financing conditions.
According to Doornbosch, a key priority is to reduce the monetary union’s structural dependence on imported energy and external transport costs. Over the medium term, continued investment in renewable energy and critical logistics infrastructure, including storage and port capacity, would strengthen the monetary union’s resilience to external commodity and transport shocks. “At the same time, given that a renewed rise in inflation would affect vulnerable households most severely, governments should consider well-targeted temporary support measures for those relying solely on social benefits to cushion the impact on the cost of living, such as the food program introduced in Curaçao during the COVID-19 pandemic, while safeguarding fiscal discipline to preserve macroeconomic stability,” he explained. In this context, maintaining sound fiscal policies becomes increasingly important to ensure that these structural and social objectives remain sustainable over time.
Additionally, a public debt sustainability analysis for Curaçao and Sint Maarten included in the March Economic Bulletin highlights that, while debt remains manageable, current trajectories are vulnerable to external shocks. The analysis reinforces the need to maintain fiscal buffers through sustained current budget surpluses, where feasible, and to advance reforms in health care and social insurance systems to contain longer-term fiscal pressures. “Maintaining the credibility of the exchange rate peg to the U.S. dollar remains a key anchor for stability, requiring our continued monitoring of exchange-rate-related effects on inflation, competitiveness, capital flows, and financial vulnerabilities, while preserving sufficient official reserves. Sustained implementation of these policy measures will be essential to safeguard stability and support durable, sustainable growth in the monetary union,” concluded Doornbosch.
The complete text of the March 2026 Economic Bulletin is available on the CBCS website at
https://www.centralbank.cw/publications/economic-bulletins/2026
Willemstad March 27, 2026
CENTRALE BANK VAN CURACAO EN SINT MAARTEN
