Economic growth in Curaçao will accelerate in 2022, to 12.3%, after a modest and partial recovery in 2021 estimated at 4.8%. Growth in 2022 will be driven by a sharper rise in tourism inflows as vaccine coverage in major source markets increases. Downside risks to the outlook for 2022 stem from the possible emergence of deadlier variants of covid-19, which, depending on the transmissibility and severity of infections caused, could force the government to adopt fresh lockdown measures to stem the spread of the virus, which would constrain GDP. An additional downside risk to growth is that rising inflation-caused in part by the surge in global fuel prices as a result of the Russia-Ukraine war-could dampen consumer confidence.

Although we do not forecast components of real GDP, we expect recovery in 2022-23 to be driven by consumption (especially private consumption), which will be aided by a continuation of some fiscal support measures and sustained growth in tourist arrivals. On the investment front, we expect pandemic-related uncertainties to linger throughout the forecast period, causing businesses to delay investment projects further. No significant public investment projects are currently pencilled in for 2022, but activity at the Isla oil refinery is due to restart this year, posing upside risks to our growth forecast. However, any revival in activity will come late in the year, as the government is still looking for an operator for the refinery after its Brazilian partner, Roberto Viana, pulled out of an earlier deal. In view of this situation, Dutch liquidity support will be crucial in stimulating recovery in 2022-23.