Update Country Report Curaçao 26 Jul 2018

Event

Tourist arrivals to Curaçao grew by 7% year on year in May, the first month of positive annual growth following several months of decline.

Analysis

Although the data are encouraging, Curaçao's economy is still set to struggle in 2018 as a result of declining Venezuelan arrivals and problems in other sectors of the economy, such as the slowdown in operations at the Isla oil refinery.

Total arrivals reached 31,251 in May, up from 29,126 in the year-earlier period. The Netherlands is the main source market, with visitors totalling 13,844 in May, representing annual growth of 14% and around half of the total visitors in 2017. This reflects close links between the two countries in the form of frequent flight connections and a Dutch-language marketing campaign targeted at increasing the numbers of Netherlands visitors.

Overall, arrivals from Europe grew by 12%, while those from North America rose by 20%. This sharp rise was facilitated by an increase in flights by WestJet, a Canadian airline, leading to a 66% annual increase in Canadian tourists visiting Curaçao in May. Arrivals from South America dropped by 28% annually, reflecting an ongoing decline in Venezuelan arrivals as a result of the ongoing political and economic crisis in that country.

It is encouraging that tourist arrivals have begun to post growth again despite the ongoing decline in Venezuelan arrivals. Yet, while this means that tourism arrivals may post positive growth figures in full-year 2018, overall arrivals figures may remain lower than pre-decline figures until into 2019, suggesting there is some way to go before the sector can be said to have fully recovered.

Impact on the forecast

The latest data are unlikely to boost economic growth in 2018, although an established growth trend would lead to improving prospects in 2019. We therefore maintain our forecast for slow real GDP growth in 2018, before a slightly broader recovery in 2019.