Outlook for 2017-18

• Elections held on October 5th resulted in a ruling coalition led by the Partido MAN and a new prime minister, Hensley Koeiman. Political stability will remain fragile, particularly if intra-coalition unity falters.
• Progress on fiscal consolidation and tackling corruption will be gradual and subject to opposition pressure. 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.
• The economy stagnated in 2016 and will record only a modest expansion in 2017-18 of just 0.4% 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 2017-18, when it will average just 2%.
• 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

• The Partido MAN narrowly won the October 5th general election, but with just 16.2% of the vote and four seats in the 21-seat legislature. It will govern as a coalition guaranteeing a small majority of 12 seats.
• GDP contracted again in the second quarter of 2016, by 0.2%. This follows a similar sized contraction in the first quarter. The Economist Intelligence Unit now expects the economy to record no growth in 2016.
• Five ships belonging to Petróleos de Venezuela (PDVSA, Venezuela's state oil company) were briefly seized due to lack of payment for using Curaçao's harbour facilities. They were released shortly afterwards.
• The current account recorded a deficit of Naf275m (US$153.6m) in the second quarter of 2016, bringing the first half deficit to Naf408.9m. This is slightly wider than the Naf375.6m level seen a year earlier.