Update Country Report Curaçao 23 Feb 2021

Event

Curaçao's latest tourism statistics indicate that tourist arrivals had begun to tick up by the end of 2020, but dropped again slightly in January 2021. This reflects the reimposition of travel restrictions in many of the island's key source markets as a result of the coronavirus (Covid-19) pandemic, which will weigh on prospects for the sector's recovery in 2021.

Analysis

In December 2020 Curaçao registered 9,909 arrivals. This was down by 78% year on year, but marked part of a steady improvement in arrivals since July, when the country reopened for tourism. In total, 174,871 tourists visited Curaçao in 2020-a 62% drop year on year.

However, hopes that the tourism recovery would pick up pace in January were undermined by new travel restrictions in the island's key source markets. The Netherlands, which accounted for 71.6% of total arrivals in December, reimposed a domestic lockdown and travel ban in late January. Arrivals from the Netherlands fell by 55% month on month in January, reflecting the impact of the lockdown partway through the month, and is likely to remain subdued in the coming months. In addition, in late January Canada banned flights to the Caribbean until April 30th, and the US introduced new rules requiring a negative coronavirus test from within 72 hours for returning US citizens. Together, arrivals from Canada and the US comprised 14.9% of total arrivals in January, or 860 arrivals.

Curaçao is therefore faced with the prospect of having to put in place infrastructure for testing US tourists, as a means of complying with the new returnee requirements. Some hotels are putting this infrastructure in place; for example, Papagayo Beach Hotel now offers coronavirus tests to guests for US$90. However, not all hotels and resorts will be able to afford this. The government also has limited financial ability to set up state- or airport-run facilities. Limited lab facilities on the island may also constrain the number of tests that can be run, potentially deterring tourists from the US, along with other markets.

A steady rollout of vaccines on the island as well as in its source markets will spur tourist flows, albeit slowly. Curaçao's tourism sector is therefore not expected to return to pre-pandemic levels in the 2021-22 forecast period.

Impact on the forecast

Our forecast for GDP growth in 2021-22 remains unchanged; however, prolonged travel restrictions in the Netherlands and North America pose a downside risk to the growth outlook for 2021.