St. Maarten’s economy contracted 1.5 percent last year

POSTED: 01/3/12 4:19 PM

Central Bank projects further contraction this year

GREAT BAY – St. Maarten’s economy contracted by 1.5 percent last year, the Central Bank of Curacao and St. Maarten reported last Friday in a press release about last year’s economic developments and the outlook for the New Year. When the local government set up the 2011 budget, it projected a 1.8 percent growth – an approach that met with resistance from the financial supervisor Cft. This year, the bank projects a further 0.3 percent contraction. Curacao’s economy contracted by 0.6 percent last year and is facing a near similar contraction of 0.5 percent this year.

The trouble at the former Pelican Resort had a negative impact on the economy. Stay-over tourism declined due to “a decline in timeshare capacity and airlift during 2011.”

The Central Bank expects stay-over tourism to recover in 2012, but remarks that this “must be seen primarily in the context of the marked reduction in timeshare capacity in 2011, due to the (temporarily – ed.) closure of the Pelican Resort. For 2012, it is expected that the situation regarding the Pelican Resort Beach Club (now Simpson Bay Resort and Marina – ed.) will stabilize.”

St. Maarten received less stay-over visitors from North America and Europe, though this decline was partly moderated by an increase in visitors from South and Central America.

The number of ships piloted into the island’s port increased last year, but airport-related activities dropped.

The construction and the financial services sectors showed a poor performance, the Central Bank reported. “Activities in the construction sector dropped in line with the decline in mortgages extended in St. Maarten. The financial services sector’s poor results are related to “a decline in net income of the domestic commercial banks, caused by higher expenses.”

Inflation in St. Maarten reached 4 percent in 2001. According to the Central Bank this rise in inflation is mainly caused by the increase in the turnover tax. “This impacted the purchasing power of consumers negatively.”

The Central Bank wrote that that the island “is projected to achieve a balanced budget outcome in 2011. Including capital expenditures, however, the country will reach an overall deficit of 0.5 percent of gross domestic product. The latter is significantly lower than the 5.25 percent of GDP that was included in the budget because of significant delays in planned infrastructure spending. Public debt is projected to remain stable in 2011.”

While Curacao is projecting a 45 million guilders budget surplus in 2012, the Central Bank was unable to report anything about St. Maarten because there were no data available.

For the complete text of the Central Bank report, see page 5 and 6, or go to the report is listed under press releases under the Publication and Research tab as Economic developments 2011 and outlook 2012.


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