Curaçao’s Economic Outlook For 2023

Curaçao’s Ministry of Economic Development (MEO) recently released a document detailing the economic outlook for Curaçao in 2023. Inflation has reached its highest level in decades as a result of the geopolitical tension surrounding the Russia-Ukraine conflict, which has caused energy prices to soar and supply chain disruptions. Nevertheless, trade is still expected to continue expanding in 2023, albeit slowly, despite this disastrous war. Future prosperity will still depend on open trade and countries working together.

The pandemic and subsequent events since the start of 2022 have highlighted the importance of striking a balance between economic growth and financial stability. While the first focuses on increasing output, the second calls for reforms. The most crucial task for the upcoming years is to achieve this balance. And Curaçao is no exception to this task. Following a significant decline of 18.4% in 2020, the island bounced back from huge shocks with a growth of 4.2 percent in 2021 and an anticipated real increase of 3.8 percent in 2022.

While economic growth is very much needed, it is important to note that labor productivity, which has been dropping since the beginning of this century, has been above average in sectors like agriculture, fisheries and mining, manufacturing, utilities, transportation, storage, and communication, financial intermediation, and real estate. Many of these activities align with the six priority areas indicated in the National Export Strategy (NES) developed by MEO, including tourism, creative industries, financial services, port & maritime services, ICT services, and education services. A recent report titled “Strategies for Sustainable Long-Term Economic Development in Curaçao” acknowledges that these industries have the potential to produce substantial economic returns as a motivator for high-efficiency investment.

The outlook
Curaçao’s outlook and performance for 2023 depend on both external and internal risks, as well as policy measures and any initiatives taken. External risks are the war in Ukraine, tighter global financial conditions, fiscal consolidation without room for public investments, the emergence of new coronavirus variants, the appreciation of the dollar vis-à-vis the euro, and the decrease in airline seat capacity. Internal risks involve the mismatch between supply and demand in the labor market as well as delays in the resumption of oil refining activities.

To circumvent the possible risks, and to further boost economic recovery, an economic recovery action plan and a national recovery plan are being developed. MEO’s outlook for 2023 will depict a scenario without the resumption of refining activities. For 2023, MEO expects inflation to drop due to a stabilization in international markets. In terms of real output, MEO expects the economy to grow by 1.2 percent compared to 2022.

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