In an environment of heightened global risks, actions needed to enhance inclusive growth and fiscal sustainability

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WILLEMSTAD/PHILIPSBURG – Curaçao and Sint Maarten have demonstrated resilience by  recording a stronger recovery from the pandemic than initially anticipated. The countries  maintained steady economic growth throughout 2024 and this momentum is expected to  continue into 2025. However, significant global uncertainties, structural vulnerabilities, and  ongoing fiscal pressures pose risks to the medium-term outlook. “To safeguard economic  stability and promote sustainable and inclusive growth, both governments must prioritize  critical public reforms, particularly in healthcare and social security, and bolster resilience to  external shocks”, recommended President of the Centrale Bank van Curaçao and Sint Maarten,  Richard Doornbosch, in the CBCS’ March 2025 Economic Bulletin.

Maintaining growth momentum in 2025

According to the Bank’s latest estimates, growth in the monetary union gathered pace in 2024,  with real GDP growth rising to 5.5% in Curaçao while moderating slightly to 3.5% in 2024 in Sint  Maarten. “The 2024 growth estimates for both countries are based on developments observed  during the first three quarters of the year, driven by strong performances in tourism and  construction. The latter was supported by increased private investment as well as public  investment, particularly in infrastructure projects”, explained Doornbosch.

Looking ahead, growth is set to continue across the monetary union in 2025, albeit at a slower  pace. “The Bank projects that real GDP will grow by 3.2% in Curaçao supported by steady private  consumption and the continuation of ongoing and planned private and public investments. Meanwhile, Sint Maarten’s economy is expected to expand by 2.6%, driven by new significant  private investment initiatives in the utilities sector and harbor infrastructure and strengthened  private consumption resulting from lower inflationary pressures and higher wages of public  servants”, he added. 

Global uncertainties continue to shape the economic outlook

However, the CBCS president warned that the economic outlook remains exposed to substantial  risks stemming from global and domestic developments, that are tilted to the downside. The  likelihood of global risks materializing has intensified as the major changes in economic and trade  policies by the U.S. administration could result in negative spillover effects for both the global  economy and the monetary union. Such protectionist trade policies could provoke retaliatory  actions from key trading partners, potentially escalating into a global trade war. This scenario may  disrupt supply chains and cause sharp increases in international commodity prices, further fueling  inflationary pressures in Curaçao and Sint Maarten. 

In addition, the increased uncertainty surrounding the pace of monetary policy easing by major  central banks, particularly the U.S. Federal reserve (Fed) and the possible expansion of sanctions  on Venezuela by the U.S. administration pose further downside risks to the economic, financial, and social developments of the monetary union. By contrast, a potential de-escalation of  geopolitical tensions in Eastern Europe, particularly due to ceasefire talks between the U.S., Russia,  and Ukraine, could lead to a decline in global energy and commodity prices, lowering inflationary  pressures in Curaçao and Sint Maarten. 

In addition to global risks, Curaçao and Sint Maarten are exposed to domestic risks including 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.  

Securing a sustainable growth path amid current challenges  

According to Doornbosch, heightened global risks combined with domestic challenges such as  the sustainability of public finances, underscore the need for targeted policy measures to tackle  the vulnerability of small and open economies like Curaçao and Sint Maarten. “To reduce risks  from tariffs and potential trade conflicts, businesses in Curaçao and Sint Maarten should diversify  supply chains away from reliance on the U.S. market. The governments of Curaçao and Sint  Maarten can support this by strengthening trade relations with alternative partners through, for  example, collaborative advocacy with CARICOM. Furthermore, promoting local production in  agriculture, renewable energy, and manufacturing could reduce external dependencies and contribute positively to both employment and growth”, recommended Doornbosch.  

“To support a more sustainable and inclusive growth path, the governments of both countries  must implement a comprehensive policy agenda that addresses labor market vulnerabilities,  reduces red tape and the cost of doing business, and enhances labor productivity. One key action  should be to diversify the economies of both countries by adding additional sectors, while  continuing to strengthen and innovate within the tourism industry. In addition, a critical  prerequisite for ensuring long-term debt sustainability in both Curaçao and Sint Maarten is the  timely implementation of reforms in the health care and social security systems”, he added. 

Lastly, prudent debt management and adherence to balanced-budget rules mandated by financial  supervision frameworks will help build the necessary buffers to absorb external shocks. “By  carefully implementing these recommendations, the monetary union can effectively navigate  current challenges and secure a sustainable path for public finances and inclusive economic  growth”, he concluded. 

The complete text of the March 2025 Economic Bulletin is available on the CBCS website at  www.centralbank.cw/publications/economic-bulletins/2025