Published On: Fri, Nov 9th, 2012

MEO: Economic growth 2012 zero

WILLEMSTAD - The Ministry of Economic Development (MEO) published their numbers for this year. The real growth of the Curaçao economy is 0 percent.

For the coming year, 2013, the MEO will take into account the growth of the gross domestic product (GDP) which is between -0.3 and 0.7 percent. This depends on how particularly tourism evolves, because that is the only export sector that exhibits an increase at all, and the height of private investments.

In an “optimistic scenario” tourism will increase with 7 percent in 2013 and showing the remaining export growth with 1 percent and rising private investment with 40 million guilders.

In a “cautious scenario” tourism will grow with 3 percent next year and the private investment will increase by only 15 million. Both scenarios take into account the reform of the health care and retirement.

MEO showed these forecasts yesterday afternoon during a presentation in the World Trade Center. There were also talks of the various industries: the international financial services and tourism. The Chamber of Commerce gave an explanation. But the eyes were focused on the Economic Outlook.

The presentation was done by Mr. Luelo Girigorie, policy director for MEO. He outlined an economic year 2012 that with an inflation rate of 3.3 percent (one percentage point attributable to the increased turnover tax of 5 to 6 percent) is almost stationary: private spending -1 percent, 0 percent public spending, and private investment 0 percent; public investments -5 percent; non-tourist export 0 percent, with tourists and overnight stays over with 8 percent positive.

Even if the magnifier is put on certain sectors there are more minuses than pluses. The construction decreased, even objectively measured quantities of used stones and sand, with -4 and -2 percent respectively. The settled cargo volume in the port for local market collapsed by -1 percent (measured by weight) and even 8 percent (measured in TEUs container numbers). The airport had 5 percent more passengers which is a positive exception. This also applies to cruise tourism which, as expected, will see a growth of 14 percent more passengers in relation to 2011.

All in all, the export is behind the import with a deteriorating balance of payments and a declining currency reserves (foreign currencies). The investments by the public sector can hardly boost the economy, given the (structural) deficit of 200 million.

Although the number of workers has increased since 2006, the unemployment rate last year was 9.8 percent (24.7 percent youth unemployment). MEO notes still mismatch between demand and supply on the labor market, complex labor and the dismissal law, but also a large proportion of the labor force (half) has only primary education.

Consumer purchasing power is weakening, with effects on spending, while for companies costs (electricity, energy, transportation and personnel) are rising. This does not do the activities in the industry any good.

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