Economic Structure

A main characteristic of the Curacao’s economy is the diversity of the economic structure which is based on a variety of “profitable” sectors.

 

A relatively large share of the Gross Domestic Product (GDP) can be ascribed to services (tourism, financial services and transport). Less sizeable, sectors are construction and agriculture & fisheries.  This division reflects the limited availability of natural resources.

 

The main services provided by the local economy are: trade, tourism and financial and business services. Of the latter, international financial services (financial offshore) formed an important part in the past.

 

 

The table below shows the share of selected sectors to the economy.

 

Sector Contribution to GDP (%)

 

2012*

Agriculture, fisheries

0,6

Tourism

17,0

Manufacturing

7,2

Construction

5.3

Trade

6,0

Transport

8,2

Financial & Business Services

28,0

*Estimate

Source: input data are derived from the statistics of the Central Bureau of Statistics

 

 

Macro Economic Review and Forecast

In 2012, the local economy registered zero real growth while the financial situation of the government deteriorated. During 2012 and 2013 the local government implemented a comprehensive package of cost reducing and income increasing measures in order to keep its public finance structurally sound. In the meanwhile Curaçao reached a balanced regular budget from which the income covers the expenditures. Moreover Curaçao reached, according to international standards, a healthy debt position of plus minus 32% of the Gross National Product.

 

In 2012, Curacao registered a relatively low inflation rate (3.2%) while in 2013 the inflation is expected to grow by just 1.1% which is considerable low compared to other economies in the Caribbean region. Unemployment decreased slightly and reached 9.8% in 2011. In 2013 the Central Bureau of Statistics reported an increased in unemployment that reached 13% of the total workforce. The major part of unemployment can be ascribed to the younger segment of the society. Worth mentioning is that job creation has been improving positively, but not enough to meet the growing workforce and population.

 

 

Current Government Policy

As part of the process leading to the new constitutional status for Curacao, the government has been committed to formulate and implement a long term economic strategy. The implementation of this strategy which started as per January 2014, aimed at achieving a sustainable long term economic development in Curaçao by expanding the economy while ensuring it has a sound business climate, which is innovative, dynamic and sustainable, generating employment and foreign exchange.  

 

More specifically, with this strategy the government of Curacao aims to a.o., pursue transition from the traditional economic sectors to a more high-value added and knowledge-based sectors economy, hereby taking into account a) Curacao’s integration into regional and global supply chains, b) the current context of globalization and c) international trade.

 

The main concept of the strategy is directed at the concepts of:

-          “High value-added” economy;

-          Prominent International trade position; and

-          Sustainable high quality of life and collective wellbeing.

 

 

Policy Challenges

As other small island states, Curacao is a.o. dependent on import, highly vulnerable to exogenous shocks, sensitive to potentially large changes in population and to brain-drain, and reliant on a limited number of economic activities.

 

Besides said unavoidable constraints and challenges, Curacao has to cope with a number of specific macro weaknesses and challenges that have been hampering economic growth.

 

In particular amongst others:

-          Low profitability due to relatively high costs of doing business;

-          Rigid labor law and legislation;

-          Relatively high administrative burden (immigration, work permits etc)

-          Mismatch between the supply and demand sides of the labour market.   

 

These weaknesses and challenges were also identified in the analysis that was executed in the process leading to the long term economic strategy. This implies that concrete recommendations have been made in the long term economic strategy in order to cope with aforementioned weaknesses and challenges to realize sustainable economic development and growth.