Curaçao and St. Maarten continue tourism-led growth

WILLEMSTAD/GREAT BAY--Economic activity in the monetary union continued to expand in 2025, according to the December 2025 Economic Bulletin of the Centrale Bank van Curaçao en Sint Maarten (CBCS). Growth was supported by strong tourism performance, ongoing investment, and moderating inflationary pressures. Data through the second quarter show that both stay-over and cruise tourism remained key drivers across the union, even as the global environment was shaped by geopolitical tensions, policy uncertainty, tighter financial conditions, rising trade protectionism, and restrictive immigration measures.

Strong growth while inflation eased across the monetary union in 2025

Curaçao’s economy expanded by 3.5% in 2025, driven by stronger-than-anticipated tourism performance. Higher hotel occupancy and increased cruise and stay-over arrivals supported activity, while investment in real estate and infrastructure also remained solid. Growth was supported by both domestic and net foreign demand, although domestic demand expanded more slowly than previously expected because public investment fell short of budgeted amounts. Net foreign demand strengthened as exports rose sharply on the back of higher tourism earnings, even though the larger import bill partly offset that gain. Inflation in Curaçao moderated to 2.4% in 2025, reflecting lower international commodity prices and easing domestic cost pressures. Fiscal performance remained stable, with the current budget surplus unchanged from 2024 at 2.2% of GDP in 2025. The public debt-to-GDP ratio declined from 65.5% in 2024 to 63.0% in 2025, reflecting stronger nominal GDP, even as the debt stock increased due to additional borrowing from the Dutch state.

St. Maarten also posted solid growth in 2025, with real GDP expanding by 3.1%, driven by stronger-than-expected stay-over and cruise tourism following completion of the airport’s reconstruction. As in Curaçao, both domestic and net foreign demand contributed to the expansion. Public investment supported growth through upgrades to the road network, sewage systems, and prison facilities, while private demand also increased, supported by higher private investment and consumption. Inflation in St. Maarten fell to 1.8% in 2025, largely due to lower international oil prices. Net foreign demand also supported growth, as tourism-related export earnings increased faster than non-oil merchandise imports. St. Maarten’s fiscal position improved, with the current budget balance moving into a surplus of 1.1% of GDP. The public debt-to-GDP ratio declined from 42.1% in 2024 to 41.2% in 2025 due to higher nominal GDP, although additional borrowing from the Dutch State moderated the improvement.

Growth momentum expected to carry over to the medium term

Looking ahead, economic growth in both Curaçao and St. Maarten is expected to slow gradually toward more sustainable medium-term rates. Real GDP growth is projected at 2.4% in 2026 in both countries, then easing to around 2.0% by 2029 as tourism growth saturates and global demand slows, while post-reconstruction effects in St. Maarten gradually fade. Inflation is expected to moderate to 2.1% in Curaçao and remain close to 1.8% in St. Maarten. By 2029, inflation is projected to converge to about 2.0% in Curaçao and 1.6% in St. Maarten, broadly in line with developments in key trading partners. Fiscal positions are projected to strengthen over the forecast horizon, with current budget surpluses expected to be maintained in both countries. Debt-to-GDP ratios are projected to decline, reaching 60.5% in Curaçao and 40.5% in St. Maarten by 2029, reflecting nominal GDP growth that is expected to outpace the increase in public borrowing needed to finance ongoing investment programs.

Regional tensions shape risk dynamics

The balance of risks to the outlook for Curaçao and St. Maarten remains tilted to the downside, driven largely by external factors. The most prominent risk cited is the tension between the United States and Venezuela, as further military escalation could increase shipping and insurance costs, disrupt trade routes, and weaken the Caribbean’s image as a safe travel destination, which would hurt tourism and foreign exchange earnings. Curaçao, due to its proximity to Venezuela, is particularly exposed to the risk of increased migration flows that could strain public services and fiscal resources.

Other geopolitical conflicts also weigh on the outlook. The war in Ukraine and tensions in the Middle East could again disturb energy markets and global trade. While the Gaza peace plan has eased immediate pressure on oil and shipping, the ceasefire remains fragile, and renewed supply disruptions or higher freight costs could push up commodity prices, raising import prices and inflation in Curaçao and St. Maarten.

Global trade remains vulnerable to policy uncertainty and protectionist measures. Despite the smaller-than-expected 2025 tariff shock, unresolved trade agreements and legal challenges in the United States could raise import costs and weaken foreign direct investment, while a delayed easing of U.S. monetary policy could keep global financial conditions tight.

Domestically, climate-related shocks, delays in executing multi-annual public investment programs, unresolved AML/CFT deficiencies, and rising fiscal pressures tied to health care and social insurance systems continue to pose challenges that could weigh on medium-term growth and stability in both countries.

‍