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.
