The Central Bank of Curaçao and St. Maarten (CBCS) in its recent annual report confirmed what was already clear: St. Maarten did not experience growth in 2017 primarily due to the onslaught of Hurricane Irma on September 6. This badly hurt the dominant hospitality industry particularly during the last four months of the year.
A 4.8 per cent decline of the gross domestic product (GDP) really wasn’t so bad when one considers the extreme and widespread destruction. Combined with an inflation of 2.2 percent (up from 0.1 per cent in 2016), this basically means having to spend more with less income, apart from the extra cost involved in recovering from a disaster of such magnitude.
One of the advantages of being in a monetary union is that when one of its members underperforms for whatever reason, the negative effect on the balance of payments can usually be compensated by the other(s). However, Curaçao too saw an economic contraction of 1.7 per cent mostly because of the ongoing crisis in neighbouring trade partner Venezuela and its impact on travel to the destination as well as the local Isla oil refinery’s activities.
In that sense one could almost speak of a “perfect storm” between the two Dutch Caribbean countries. It’s therefore safe to conclude that 2018 won’t be easy either.
The upside is that despite and certainly before these setbacks tourism seemed to be doing well in both destinations. This should in principle offer enough prospects for restoring their respective economies.
One apparent weakness is that they rely quite heavily on guests from specific areas. For Curaçao that is Europe (mainly the Netherlands) and for St. Maarten North America (the US and Canada).
Contrary to Curaçao, which has other industries, St. Maarten depends almost solely on foreign visitors to earn its livelihood. All the proverbial eggs aren’t exactly in one basket though, because the stayover, cruise and yachting tourism sectors each provide significant contributions.
CBCS’ advice to diversify source markets is nevertheless well-taken. Latin America, but also other regions have the potential to provide substantial alternatives.
