Outlook for 2017-18

• After elections on April 28th Curaçao is now governed by a ruling coalition led by the Partido Antiá Restrukturá (PAR) and a new prime minister, Eugene Rhuggenaath. He has a slightly stronger mandate than his predecessor.
• 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 security in the form of 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 public debt/GDP ratio of over 40% adds an element of fiscal risk.
• GDP is estimated to have contracted by 0.1% in 2016 and will recover only modestly in 2017-18, growing by just 0.4% per year on average. Growth will be hindered by public spending cuts 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 narrow slightly as a share of GDP, but will remain large. Recovering tourism demand will push up services receipts, while the trade deficit will narrow.

Review

• The PAR managed a narrow win in the recent elections, securing 23.3% of the votes and six (out of 21) seats in the legislature.
• After nearly two weeks of negotiations, a ruling coalition was established under the leadership of the PAR and also including the Partido MAN (MAN) and the Partido Inovashon Nashonal (PIN), brining the total seats to 12.
• Real GDP was flat in the third quarter of 2016, resulting in an annual average contraction of 0.1%. The island's growth outlook will continue to largely depend on tourism and a reactivation of domestic consumption.
• The current account deficit widened to US$566 in 2016, equivalent to 18% of GDP. This was partly due to a fall in goods exports that offset a decline in imports.
• Tourism remained weak in the third quarter of 2016, with stay over visitors falling by 7.2% year on year. Cruise arrivals fell by an even steeper 35.5%