WASHINGTON, DC - The International Monetary Fund (IMF) says reaping the post-pandemic tourism boom, Curaçao’s and Sint Maarten’s economies have been expanding strongly, driven by stayover tourists and construction activity.
The Washington-based financial institution said that disinflation broadly continued, with some uptick in Sint Maarten throughout 2024.
“The Union’s current account deficit remained elevated as rising tourism receipts were offset by construction-related imports. In both countries, the fiscal position remained strong and in compliance with the fiscal rule. Progress on the landspakket, the structural reform package agreed with the Netherlands in 2020, has recently slowed, with notable exceptions around digitalizing permits,” the IMF said.
The IMF executive board has just concluded the 2025 Article IV consultation discussions with Curaçao and Sint Maarten, and with regards to the outlook for Curaçao, it said growth is projected to moderate to four per cent in 2025, balancing domestic impulses and heightened global uncertainty.
It said further expansion of stayover tourism and construction activity will continue to support growth in 2025, along with fiscal expansion driven by higher public investments.
Growth is expected to moderate to two per cent over the medium term, given saturation in tourism and slower global demand, while public investments would be carried forward. Inflation is projected to stabilize at 2.5 per cent in 2025 and gradually converge to two per cent in the medium term. Primary fiscal balances would remain in surplus. The current account deficit would decline in the medium term but remain elevated.
In the outlook for Sint Maarten, the IMF said growth is projected to remain robust in the near term as tourism capacity expands.
It said stayover tourism will continue to drive growth in 2025 to three per cent. Further expansion in hotel capacity will add to the island’s potential to sustain growth, partially counterbalancing the headwinds from slowing global demand.
“Over the medium term, growth is expected to converge to two per cent as tourism is approaching carrying capacity. Inflation would remain broadly contained, at 3.3 per cent in 2025, tapering off to two per cent in the medium term.
“The fiscal position is expected to deteriorate temporarily on account of stronger investments. The current account balance is envisaged to gradually turn into a small surplus in the medium term,” the IMF said.
It said the risks to the outlook for both countries are tilted to the downside.
“Global trade policy and investment shocks and a stronger-than-expected global slowdown would adversely impact tourism and could raise import prices on both islands. A stronger-than-expected execution of infrastructure projects could lift growth.”
The IMF said monetary policy is appropriately targeted towards maintaining the peg. The financial sector is broadly sound and systemic risks are contained, as banks are adequately capitalized and highly liquid.
