Update Country Report Curaçao 02 Jun 2021

Event

Curaçao is easing its coronavirus (Covid-19) restrictions in response to a sustained decline in cases. With its vaccination drive going well, the island is hoping to encourage an upsurge in tourism over the summer months, which will have positive economic implications.

Analysis

On May 31st the prime minister, Eugene Rhuggenaath, announced that several of the restrictions that were imposed in mid-April in response to a surge in daily Covid-19 infections would be loosened from June 2nd. A curfew has been relaxed (enabling restaurants and bars to remain open until midnight), restaurants are allowed to operate at 50% capacity, and gatherings of 25 people are permitted at homes and in public places.

The reopening of Curaçao's economy reflects the island's success in reducing its Covid-19 case count. As at June 1st there were only 23 active cases across the island, and only one new case was recorded in the last week of May. The drop in daily infections reflects the impact of the restrictions, as well as high vaccine uptake, which has reduced both the severity of the virus and its transmissibility. As at June 1st nearly 85,000 people (54% of the population) had received at least one dose, and almost 69,000 (43.7%) had been fully vaccinated. Vaccine shipments from the Netherlands (the island's main vaccine supplier) are likely to continue smoothly, making the island well placed to reach herd immunity by as early as the third quarter of the year.

These developments bode well for a strong tourism recovery in the second and third quarters as Curaçao's main source markets in North America and Europe approach the summer holiday months. Curaçao's faster vaccine rollout compared with some larger Caribbean islands will make it more attractive to tourists. The government is also in discussions with the Netherlands about the possibility of being included under the EU's digital vaccination certificate. If confirmed, this would be a significant boost for Curaçao tourism, as fully vaccinated holders of the certificate can travel between EU countries and overseas territories.

Impact on the forecast

A recovery in tourism during the summer season will underscore substantial economic recovery in the second half of 2021. Assuming that the current rate of vaccination continues and that any restrictions imposed in response to future case spikes are mild, we will revise our real GDP forecast for 2021 to show a higher rate of growth than our current projection of 5.5%.