CBCS revises economic outlook High inflation to persist in 2022

Central Bank of Curacao and Sint Maarten. Photo stmaartennews.com

Willemstad/Philipsburg – According to Richard Doornbosch, President of the Centrale Bank van Curaçao en Sint Maarten (CBCS), the economies of Curaçao and Sint Maarten are still expected to continue their recovery path in 2022 with economic activity accelerating in both countries.

However, higher than initially projected inflation on the back of rising international commodity prices and continued supply chain bottlenecks has induced a downward revision of 0.5 percentage point to 6.1% for Curaçao and 0.3 percentage point to 14.3% for Sint Maarten.

Contrary to the December 2021 outlook that envisioned a decline of inflation across the monetary union, inflation is now projected to rise further over the course of 2022. “For Curaçao, the inflation forecast has been revised upward by 1.5 percentage points to 4.9% while in Sint Maarten inflation is expected to remain elevated at 4.1%, 1.3 percentage points higher than previously projected.

The higher inflation will curb disposable income and, as a result, affect private consumption in both countries”, Doornbosch explains in the March 2022 issue of the Bank’s Economic Bulletin.

Doornbosch warns that the current global events have significantly increased inflation risks.
“Spillover effects from the recent invasion of Ukraine by Russia, including higher international prices of crude oil and grain products and heightened supply bottlenecks could further fuel inflation across the monetary union and, as a consequence, inhibit growth.

Also, higher inflation could affect disposable income in the United States and the Netherlands, the two main source markets for tourism in Sint Maarten and Curaçao and, hence, affect the projected increase in tourism arrivals. In addition, a strong depreciation of the euro vis-à-vis the dollar amid the conflict in Ukraine will make Curaçao and Sint Maarten more expensive for European tourists”, he explains.

The complete text of the Report of the President and the Bank’s Economic Bulletin of March 2022 can be viewed on the CBCS website at www.centralbank.cw under the Publications section.