St. Maarten’s gross domestic product (GDP) rose by 3.1% this year compared to 3.8% in 2023 (see Thursday newspaper). According to the December bulletin issued by the Central Bank of Curaçao and St. Maarten (CBCS), this slowdown is due to completion of several large projects including the airport, while electricity outages played a role too.
To be sure, growth was still well ahead of the Latin American and Caribbean average of 2.2%, raised from the 1.8% outlook in August. On the other hand Curaçao experienced an accelerated expansion of 5.4%, up from 4.2% last year.
For 2025 the latter is expected to decline to 3.2% and in St. Maarten to 2.6%. To put it in perspective, the regional figure next year is estimated at 2.4%.
Curaçao and St. Maarten both had an inflation of 3.1% in 2024, compared to respectively 3.5% and 2.8% the year before. In other words, real purchasing power did not increase.
The January return of Donald Trump as US President is mentioned as an external risk. The islands import about half of their goods from the United States, with St. Maarten also exporting 64% of its services to the American market.
Potential protective trade measures such as increased tariffs on Chinese products could drive up US consumer prices. This would likely affect the local cost of living.
Higher inflation might prompt the US Federal Reserve to maintain elevated interest rates. This could strengthen the US dollar against the euro, making travel to Curaçao and St. Maarten more expensive for European tourists. Simultaneously, higher inflation could erode the spending power of Americans, potentially reducing the number of visitors from the US.
However, import duty hikes may benefit American manufacturers and their employees. Potential tax cuts and lower energy costs in the US could also have positive effects.
The Dutch Caribbean countries have no influence over what happens abroad, so they need to focus on what can be done locally to reinforce their respective economies through – among other things – diversification also within the dominant hospitality industry. Enhanced resilience is the name of the game.
