Update Country Report Curaçao 03 Mar 2020

Event

According to the Curaçao Tourist Board (CTB), tourist arrivals rose by 3% year on year in January.

Analysis

The growth in stay-over tourism arrivals remains strong, following an uptick of 8% in 2019. The CTB reported that visitor arrivals totalled 45,691 in January, with arrivals from North America growing by an impressive 21% year on year; US arrivals grew by 26% year on year. Regional tourism also performed well, with arrivals from the Caribbean rising by 23% year on year. However, arrivals from Europe-another core source market-grew by only 1%, despite a record number of arrivals from the Netherlands (18,863).

In 2020 we expect that foreign demand will help to support the economy, which has been contracting for the past four years and shrank by an estimated 2% in 2019. A new regional airline, Jetair Caribbean, which will run biweekly flights between Curaçao and Sint Maarten, is likely to boost arrivals and complement government efforts to promote the island as a tourist destination. Investment in the tourism sector is also likely to help to spur domestic demand to some degree as tourism-related projects take hold. This investment will be supplemented by a new Naf30m (about US$17m) loan to Curaçao from the Netherlands, granted as part of an economic development agreement signed in 2019.

Nevertheless, positive signs regarding tourism and investment may be undermined by the spread of the coronavirus beyond China. Although no cases have yet been reported in Curaçao, tourism to the island, particularly from the Asia-Pacific region, may decline as the virus spreads. Tourists may be concerned about contracting the virus at airports and during flights, as well as through potential contact with carriers from different countries once they reach their destination. Cruise travel may be particularly affected, given the rapid spread of the coronavirus on the Diamond Princess cruise vessel, which was quarantined off Japan in February. This could have negative consequences for Curaçao, as cruise arrivals form a significant proportion of its tourist industry; 45 cruise vessels called at the island in January, bringing 123,316 visitors.

Impact on the forecast

Arrivals are likely to be negatively affected by the coronavirus in the near term and could suffer later in 2020 if the virus spreads again during the northern hemisphere winter. As a result, we are likely to moderate our growth outlook, which was already negative, as we had anticipated that the tourism sector would be a growth driver in 2020.