Outlook for 2016-17

• The government of the prime minister, Bernard Whiteman, will serve out its term, but no significant policy initiatives can be expected to advance before the September 30th election, and political stability will remain fragile.
• Progress on fiscal consolidation and tackling corruption will be hampered by the government's slim majority. Tougher counter-narcotics action in Central America poses a risk to Curaçao's security from diverted drug flows.
• The Kingdom Council of the Netherlands will continue to provide fiscal supervision to Curaçao and help it to maintain a balanced budget. A high public debt/GDP ratio of over 40% adds an element of fiscal risk.
• After emerging from a three-year recession in 2015, the economy will post further modest expansion in 2016-17, at just 0.3% per year on average, with growth hindered by public spending cutbacks and weak consumer demand.
• A fragile economic recovery and deflationary pressures emanating from low oil prices will keep inflation at bay in 2016-17, when it will average just 1%.
• The current-account deficit will continue to narrow, but will remain large. Recovering tourism demand abroad will push up services receipts, while the merchandise trade deficit will narrow, owing to cheaper oil imports.

Review

• Ahead of the September election, former prime minister Gerrit Schotte remains popular, with 27% support in a recent opinion poll, despite his conviction earlier this year for bribery, which is currently under appeal.
• The Isla oil refinery has suffered a series of strikes during September, owing to wage issues between the company and the union. The strikes have led to temporary blackouts on the island.
• According to official data, the economy expanded by 0.3% in 2015, thereby ending a three-year recession. However, a recent IMF Article IV report suggested that growth was weaker, at just 0.1%.
• Annual consumer inflation was negative in July, falling by 1%. This was the third consecutive month of deflation.
• Stay-over tourism arrivals fell by 3.3% in the second quarter of the year as the island continues to suffer from the fall in Venezuelan demand.