WASHINGTON, CMC – The International Monetary Fund (IMF) says that, as they reap the benefits of 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 stated that disinflation continued broadly, with a slight uptick in Sint Maarten throughout 2024.
“The Union’s current account deficit remained elevated as construction-related imports offset rising tourism receipts. 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. Regarding the outlook for Curaçao, it stated that growth is projected to moderate to 4 percent 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 2 percent over the medium term, given saturation in tourism and slower global demand, while public investments will be carried forward. Inflation is projected to stabilize at 2.5 percent in 2025 and gradually converge to 2 percent in the medium term. Primary fiscal balances would remain in surplus. The current account deficit is expected to decline in the medium term but will 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 stated that stayover tourism will continue to drive growth in 2025 at a rate of 3 percent. 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 percent in 2025, tapering off to 2 percent in the medium term.
“The fiscal position is expected to deteriorate temporarily on account of stronger investments. The current account balance is envisaged to turn into a small surplus in the medium term, gradually,” 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 stated that monetary policy is appropriately targeted to maintain the peg. The financial sector is broadly sound, and systemic risks are contained, as banks are adequately capitalized and highly liquid.
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