IMF: Continued Growth for Curaçao
According to the IMF, Curaçao has experienced significant economic growth in recent years, driven by a successful shift toward a tourism-based economy. After moving away from traditional industries such as offshore finance and oil refining, Curaçao’s economy expanded by 4.2% in 2023. The tourism sector, which saw a 20.3% increase in stayover arrivals, has been the key engine of this growth. Investment in new hotels and accommodations has boosted economic activity, with further expansions expected to increase hotel capacity by 47.1% by 2026. Economic growth is forecasted to accelerate to 4.5% in 2024, continuing the island’s post-pandemic recovery.
GDP Growth
Employment Success and Labor Market Challenges
Curaçao's economic success has been reflected in its labor market, where unemployment fell to a record low of 7% in 2023, the lowest rate since 2018, and is expexted to continue to fall to 6.6% by 2025. However, much of the job creation has been concentrated in the informal sector, leaving registered employment 8% below pre-pandemic levels. Real wages, while still declining, saw a smaller decrease in 2023 of 0.8%. Formalizing the labor market and ensuring more equitable wage growth will be important as Curaçao continues to expand.
Unemployment Rate
Positive Fiscal Outcomes
Curaçao's government has managed to maintain a strong fiscal position, posting consecutive surpluses in 2022 and 2023. Public debt has been reduced from 90.3% of GDP in 2021 to 70.8% in 2023, and expected to further decline to 65.4% and 61.1% in 2024 and 2025 respectively. The country’s fiscal discipline has granted access to favorable financing terms from the Netherlands and these surpluses provide much-needed fiscal space to address critical investments in infrastructure and public services.
Debt to GDP
Key Challenges and Opportunities
Despite this strong performance, challenges remain. Tourism capacity could soon reach its limit without further infrastructure investment. Additionally, Curaçao faces mounting pressure from an aging population, straining healthcare and pension systems. Addressing these demographic challenges will require reforms, including pension adjustments and healthcare efficiency improvements. The labor market also requires strengthening, particularly in formal employment and wage growth.
How We Can Help
At Res Publica we offer strategic guidance to help sustain economic growth. We offer expertise in:
Labor Market Reforms: Formalizing employment and reducing labor market gaps to boost productivity.
Fiscal Strategy: Helping to manage debt sustainably while investing in key public sectors.
Social Security Reform: Designing solutions for long-term sustainability.
By partnering with us, we can turn current challenges into opportunities, ensuring economic success endures well into the future.
