SINT MAARTEN (GREAT BAY) - Economic growth is set to ease in Sint Maarten in 2024. Following an expansion of 3.8% in 2023, growth is expected to fall slightly to 3.5% in 2024 and moderate to 2.3% in 2025, according to estimates of the Centrale Bank van Curaçao en Sint Maarten (CBCS) in its September 2024 Economic Bulletin.
Still, the outlook for 2024 represents an upward adjustment of 0.3 percentage point from June on account of a more optimistic growth forecast for both cruise and stay-over tourism.
Domestic and net foreign demand are expected to contribute positively to Sint Maarten’s real GDP expansion in 2024. The increase in domestic demand is sustained primarily by a gain in private investments, particularly ongoing large commercial and residential projects, while the positive contribution of net foreign demand is attributed to the increase in exports outpacing the higher import bill.
Continued growth driven by tourism and investment
Sint Maarten is expected to continue its economic growth momentum in 2024, consistent with the steady expansion recorded in the January – March quarter of the year.
The positive development in 2024’s first quarter was largely due to activity growth in the accommodation & food service activities sector, with both stay-over and cruise tourism experiencing an increase.
In addition, the gain in the number of tourists fueled real value-added growth in the transportation sector, while real output rose also in the construction sector reflecting ongoing private investments.
Meanwhile, inflation in Sint Maarten will reach 2.8% in 2024, up from 2.1% in 2023. In 2025, inflationary pressures are expected to drop to 2.0%. The inflation forecast for 2024 has been revised up from June, induced by higher-than-initially projected international oil prices.
The impact of PJIA on Sint Maarten’s economy and its strategic role
“The September 2024 Economic Bulletin also includes a feature article on the economic impact of the Princess Juliana International Airport (PJIA) in Sint Maarten.
“PJIA plays a strategic role in Sint Maarten’s economy,” explained CBCS president, Richard Doornbosch.
The article describes the significant value-added in Sint Maarten’s GDP by production indirectly contributed by PJIA. Likewise, PJIA contributes substantially to employment and public revenues, both directly and indirectly, the CBCS president pointed out.
The article also illustrates the country’s vulnerability to external shocks. In 2017, Hurricane Irma caused catastrophic damage to PJIA’s main terminal building. A still-recovering PJIA was struck by disaster again as global travel shut down in 2020 to contain the spread of the COVID-19 virus. As Sint Maarten’s main international gateway, the consequences for the country’s tourism-based economy were profound.
The reconstruction of the airport became a lengthy and complex process that faced several delays. Despite initial setbacks, reconstruction work gathered pace at PJIA with the opening of the departure hall in November 2023, the check-in area in February 2024, and finally reaching full capacity with the arrival hall set for reopening in the fourth quarter of 2024.
“An important lesson that can be learned from the recent experience with PJIA is that, particularly for small-island tourism driven economies, having key infrastructure like an airport running at full capacity is vital to stimulate broader economic activity. Given its role as an international gateway, the airport can also further contribute as a logistical hub to the economic diversification of Sint Maarten,” Doornbosch added.
The CBCS president stated that Sint Maarten has continued its post-pandemic recovery path and is expected to prolong this positive trend in the near-term. However, he cautioned that, although the monetary union has largely rebounded from the severe contractions caused by previous shocks, some barriers to growth such as limited access to finance and underutilized key infrastructure persist.
“Overcoming these constraints is crucial for fostering sustainable growth and improving the quality of living in Curaçao and Sint Maarten,” the CBCS president concluded.
The complete text of the September 2024 Economic Bulletin is available on the CBCS website at https://www.centralbank.cw/publications/economic-bulletins/2024.
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