After three years of contraction in 2016-18, during which time real GDP contracted by a combined 4.7%, we project only a very marginal recovery in 2019-20. We are projecting annual average GDP growth of just 0.3% in 2019-20. This mainly reflects expectations of a pick-up in investment (particularly in construction) and tourism activity, which will offset a continued poor performance by the manufacturing sector (reflecting the Isla refinery's ongoing woes). A stronger recovery will be precluded by the government's need to tighten fiscal policy during the forecast period.

Minimal growth in real wages and high levels of unemployment will constrain private consumption demand. Growth will be further hampered by tougher international financial regulation, which is acting as a brake on offshore services and company formation.

Our forecasts are subject to downside risk: Curaçao's small, open economy will remain highly sensitive to shifts in commodity prices, and the ebb and flow of international tourism demand. If the external backdrop deteriorates, real GDP could easily slip back into negative territory in 2019-20.