Curacao’s economy shrinks in the first quarter of 2017.

WILLEMSTAD, Curacao:— The Central Bank of Curaçao and Sint Maarten reports that the economy of Curacao during the first quarter of 2017 with an estimated 0.9% has shrunk compared to the first quarter of 2016. The economic downturn in the first quarter of 2017 was accompanied by higher inflationary pressures, mainly as due to an increase in gasoline and electricity prices. Inflation increased 0.0% in the first quarter of 2016 to 1.7% in the first quarter of 2017.

The analysis by sector in the Bank’s first quarterly report of 2017 shows that the shrinkage of real Curaçao’s GDP was mainly due to a decline in activities the private sector. The restaurants & hotels, transportation, storage & communications and large-
& retail in particular, recorded negative growth in the first quarter of 2017. Real value added decreased in the restaurants & hotels sector by a decline the number of overnight tourists and the number of overnight stays, the Bank expires. The disappointing
The performance of the tourism industry was largely due to the sharp decline in the number visitors from South America and the Caribbean. The Bank indicates that the ongoing Economic and political crisis in Venezuela was the main cause of the shrinkage in the South American market, while the cancellation of flights to different destinations in the region by the local airline, InselAir, resulted in the strong decline in the Caribbean market. Also, the number of tourists from North America and Europe decreased. On the other hand increased the number of cruise tourists.

The transport, storage & communication sector recorded a decline due to the activities in both the airport and the seaport. The activities related to the airport decreased by a decrease in the number of passengers handled and the number of commercials
landings due to the cancellation of various flights by InselAir due to financial problems. The shrinkage in the port was due to a decrease in the number of ships that the port moderated by an increase in oil storage activities and the number container movements. The decline in the wholesale and retail sector was the result of one decrease in tourist spending, which was somewhat offset by the increase in the domestic spending and the growth in exports by companies in the free zone. The
utility sector has also recorded a shrinkage due to a decrease in the production of electricity, which was tempered by an increase in water production.

However, in the sectors of industry, construction and financial services, the real added increased value, which slightly reduced the economic downturn in the first quarter of 2017, explains the Bank. Real production increased in the industry driven by an increase of the refinery activities of the Isla refinery, while the growth in the construction sector was due to an increase in both private and public investment. The expansion in the sector Financial services can be attributed to the increase in the actual added value of local financial services. 

In the area of public finances, the government of Curacao registered a lower rate surplus on ordinary employment in the first quarter of 2017 compared to the first quarter of 2016 due to the growth in expenditure exceeding the increase in revenue. The Expenditure growth was mainly the result of more transfers, in particular transfers to social security and more expenses for goods and services. The increase in the Revenue was driven by an increase in both tax and non-tax revenue. Tax revenues increased, mainly as a result of an increase in revenue income taxes, excise duties and sales tax, while the increase in non-tax revenue largely the result of an increase in social security contributions, according to the Bank. The full text of the Bank’s first quarterly report 2017 is available on the Bank website

Translated Press Release from the Central Bank of Curacao and St. Maarten

Source: St. Martin News Network