PHILIPSBURG–The reconstruction of St. Maarten post Hurricane Irma should be driven by a concerted effort of the public and private sectors with financial and technical support from the Kingdom, said the Central Bank of Curaçao and St. Maarten (CBCS).
In that context, “political stability must be restored to create a macroeconomic environment conducive to private sector investments and growth,” CBCS said as it forecast that the economy will contract in the second half of 2017 and in 2018 in the wake of Irma’s destruction. This means that “fast and smooth recovery, the speed and quality of the reconstruction is crucial.”
Reviewing the earlier part of the year in its Quarterly Bulletin, CBCS said the country’s real gross domestic product (GDP) had expanded at a slightly faster pace in the first half of 2017 (0.3 per cent) compared to the first half of 2016 (0.1 per cent).
Following a deflation in the first half of last year, the country’s price pressures rose to 2.0 per cent in the first half of this year. This was attributable particularly to higher electricity prices and an increase in health care premiums.
Due to problems in its information technology (IT) infrastructure, Government was unable to provide CBCS with quarterly public-sector data for the first and second quarters of 2017. Instead, Government provided data for the first half of 2017. Consequently, for consistency purposes, CBCS analysed the economy on a half-year basis.
However, Sint Maarten’s real GDP estimate should be interpreted with caution, because it is based on the real GDP projections of the country’s main trading partners due to the absence of stay-over tourism data.
CBCS’ analysis by sector reveals that the real GDP growth in the first six months of 2017 was led by more activity in the manufacturing, construction, restaurants and hotels, transport, storage, communication, and real estate, renting, and business activities sectors.
The positive contribution of the manufacturing sector was the result of more repair activities on yachts that visited St. Maarten.
Increased private investments, mostly in the real estate and transportation sectors, caused the growth in the construction sector.
Higher real value added in the restaurants and hotels sector reflected an estimated increase in the number of stay-over visitors and a rise in the number of cruise tourists.
Activity in the transport, storage, and communication sector increased because both the airport and the harbour performed well.
Airport-related activity rose in line with the estimated stay-over tourism growth and air transportation services provided by the domestic carrier, Windward Islands Airways International Winair, went up.
The Harbour recorded a positive outcome as reflected by an increase in the number of ships piloted into port and more container movements.
On the other hand, the wholesale and retail trade, utilities, and financial intermediation sectors contributed negatively to the real economic growth in the first half of 2017. The wholesale and retail trade sector’s contraction was attributable to a decline in consumer spending, moderated by an increase in tourism spending.
Real output shrank in the utilities sector due to lower electricity production, moderated by an increase in water production.
Real-value-added contracted in the financial intermediation sector, owing to a decline in net interest income of the domestic commercial banks.