Published On: Thu, Aug 1st, 2013

The Curacao economy shrunk with 0.1% in 2012

WillemstadWILLEMSTAD – The recently published 2012 annual report of the Central Bank of Curaçao and Sint Maarten (CBCS) reported that the economy of Curaçao has shrunk with 0.1% in 2012. This confirms the report which was previously published by the Central Bureau of Statistics that Curaçao finds itself in a situation of economic stagnation. All indications points towards the direction that the economic downturn will not only maintain itself in 2013 but will even deteriorate. For 2013, the CBCS expects a further decrease of 0.7%.

The causes of this decline are familiar: declining in the confidence among investors, because of, among other, the coalition instability, lack of policy consistency, questions regarding the aspect of good governance, inability to address, among other weaknesses in the investment climate in the stifling bureaucracy, high and ever-increasing "costs of doing business" (heavy tax and social contribution burden, high utility and telecom rates, low labor productivity), inflexible in the labor market, security troubles and imbalances of payments.

Failure to address and solve these problems discourage private investment while it is urgent to encourage these types of investments.

Because of the precarious public finances, the public sector has limited resources to invest on a great scale.

These circumstances should be reasons for the Government to take measures to stimulate investments in the private sector.

The VBC pleads for a joint approach aimed at restoring and expanding sustainable economic growth. Higher economic growth is in fact essential to guarantee, maintain and improve the social environment and prosperity of the island. The encouragement of investment is a prerequisite with such a growth strategy. It is therefore important to direct all efforts on improving the investment climate indicated above. In this way, confidence in the economy will increase. Calculations of the CBCS show that increased economic growth by 2% will generate an additional tax revenue of ANG 30 million for the government. Here are resources available to improve the level of education, security, health, housing and transport. This trend will only strengthen further growth causing an upward growth spiral.

Calculations of the CBCS also show that the construction of a new hospital for example (= investment) will lead to an increase in economic growth of 1.1%.

What are we still waiting for?

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