Curaçao's economy in brief

Source: Central Bureau of Statistics (1-8), Central Bank of the Netherlands Antilles (9-11, 18-19), and
Directorate of Labor Affairs (15-17).
The exchange rate used is: ANG 1.00 = US$ 0.549.
1. Inflation is the 12-month average of the year compared to the 12-month average of the previous year.
2. Population per January 1st of the year.
4. Based on provisional data from the CBS.
5. For Gross National Income per capita the mid-year population figures were used: 129.0 x 1,000 for 2001, 128.4 x 1,000 for 2002 and 131.8 x 1,000 for 2003. For 2004 a Chamber estimate is given.
9. Per end of June 2005 foreign exchange reserves increased and reached US$ 845 million.
15. The minimum wage is applicable to all sectors. Per 1st of August 2001 an hourly minimum wage was introduced.

Curaçao Chamber of Commerce, 3 August 2005

Inflation

For years Curaçao’s inflation rate despite many international influences has shown a moderate rate of 1.4% on average during the period under review (2001-2004). This can be explained by our major trading partners, the USA, the Netherlands and Venezuela, as well as the fact that the Antillean guilder is pegged to the US dollar since December 1971. In this regard, the Central Bank has done an excellent job to safeguard our national currency.

2001 2002 2003 2004
Inflation rate 1.8 0.4 2.1 1.4

Source: Central Bureau of Statistics

Especially the categories food and housing experienced an increase in 2004 in their general price level. The euro appreciated against the US dollar which had its impact on food prices, while the price of gasoline also rose. Mid 2005 both US crude and London Brent crude traded above $60 a barrel. Oil prices have been much higher than a couple of years ago, because of a growing demand from the US, China and India. This year transport, communication and again housing are the ones with the highest price increase, in particular utility rates and gasoline prices.

Foreign Exchange Reserves

According to Central Bank statistics, out of the US$ 653 million foreign exchange reserves, the official foreign exchange reserves at the Central Bank amounted to US$ 548 million. The official ‘forex’ reserves are generally used to calculate if average monthly merchandise imports, which were US$ 155 million in 2004, are sufficiently covered. The Netherlands Antilles (in particular Curaçao) complies with the minimum international standard of 3 months imports coverage. In our case, the official foreign exchange reserves even show a 3.5 months imports coverage.

The Central Bank states that the high level coverage was primarily caused by the inflow of foreign exchange by the Dutch Government in connection with the USONA (Dutch aid) public sector projects and the dividend tax from the BRK (special tax arrangement between the Netherlands and the Netherlands Antilles to prevent double taxation).

Gross Domestic Product

As illustrated in the table below the largest sector without a shadow of doubt is made up by non-financial corporations with a US$ 1,074 million share in the Gross Domestic Product of Curaçao. Our island’s total GDP at market prices amounted to US$ 2,250 in 2004. Trade and private education seem to dominate this sector with the highest gross value added. The next sector in magnitude is the financial corporations with a US$ 423 million gross value added. The public sector and households together with the non-profit institutions close the ranking list with, respectively, US$ 324 million and US$ 198 million in gross value added.

What follows is the breakdown of the various sectors as well as the most relevant industries their gross value added.

Curaçao’s Gross Domestic Product by sector, in million USD 2004

Gross value added of non-financial corporations 1,074
Agriculture, fishing and mining 11
Manufacturing 136
Utilities 86
Construction 56
Trade 302
Hotels and restaurants 54
Transport, storage and communication 144
Private education 162
Health, social work and other services 124

Gross value added of financial corporations 423
Financial intermediation 423

Gross value added of Government including social security 324
Public administration and defense, social security 131
Education 69
Health and social work 66

Gross value added of households and non-profit institutions serving households 198
Real estate, renting and business activities 167

Taxes less subsidies on products 230

GDP at market prices, all sectors 2,250

Source: Central Bureau of Statistics

To further stimulate private sector investment and attract foreign direct investment (FDI) one must add, that further optimization is required in the areas of procedures for issuing establishment permits. Hopefully, the new legislation plus the new computerized handling system at the Bureau of Economic Affairs will speed up procedures and make the whole process more transparent. Of course, this is only one aspect that needs attention.

Employed Population

The top economic activities generating and sustaining jobs on the island are ranked as follows: wholesale and retail trade, real estate and renting, and education. It comes as no surprise that trade is the largest job supplier in the economy. Followed very closely by health and social work, plus manufacturing.

We have a total of 50,438 employees adding their part to the overall production. Of course if the various components of services were to be added this would clearly demonstrate that our economy in the heart is based on services. To name a few: tourism, transport services, financial and business services, and health and social work. Focusing on services will ultimately give fruit as it’s what we do best. ?

Employees by economic activity 2004
Total in Curaçao 50,438
Agriculture and fishing 504
Mining 102
Manufacturing 3,918
Utilities 703
Construction 3,397
Wholesale and retail trade 9,385
Hotels and restaurants 3,845
Transport and storage 3,169
Financial intermediation 3,297
Real estate and renting 4,852
Public administration, social sector 2,003
Education 4,376
Health, social work 4,103
Other community 2,433
Private households 82

Source: Central Bureau of Statistics.

Average Wage-costs

Available data from the Central Bureau of Statistics indicates that the average employee on an annual basis earns US$ 23,497. Of course, each economic activity has its own average wage. This is reflected in the table further below.

Highest paid workers are found in the sectors financial services, utilities and transport and communication. Employees in hotels and restaurants are not that well paid, but that was to be expected as not all branches are able to sustain high operational costs. The choice is either you have a job or you don’t have it at all. In addition, the supply and demand mechanism is also at work, although education plays a vital role in this.

Notwithstanding, it is tourism that attracts much needed attention, as this sector has the highest potential to absorb a major part of our unemployed. For this to really have a positive impact adequate training needs to be in place and candidates must be motivated to succeed.

In this context, it is recommended that the “Lei di Bion” would be implemented for the island of Curaçao through which employers may have an added incentive to give unemployed persons a job. Finally, a tailor-made upgrading program for the hospitality sector should be expanded seeing the many new activities in the hotel industry.

Average wage costs per worker in USD Per annum
Industry total in Curaçao 23,497
Agriculture and mining 15,647
Manufacturing 21,356
Utilities 44,963
Construction 19,544
Trade 17,842
Hotels and restaurants 13,725
Transport and communication 32,830
Financial services 52,759
Business services 24,870
Education 25,583
Health and social work 24,980
Other services and education 16,964

Source: Central Bureau of Statistics.