Annual Report Contents: 9/7/2017. I. Economic Developments II. Monetary Developments III. Economic Outlook

Transcription

1 Annual Report 2016 Centrale Bank van Curaçao en Sint Maarten September 7, 2017 Contents: I. Economic Developments II. Monetary Developments III. Economic Outlook 1

2 Part I Economic Developments Real Sector 3 Developments in the monetary union Current account balance (in mln NAf.) -1, ,035.0 Change in gross foreign reserves of the central bank (in mln NAf.)* Change private loans (%) January June July December Real GDP growth (%) Curaçao Sint Maarten Inflation (%) Curaçao Sint Maarten *- sign means an increase 2

3 Macro-economic key figures: a comparison Real GDP Consumer prices Unemployment rate * Curaçao 0.3% -1.0% -0.5% 0.0% 11.7% 13.3% Sint Maarten 0.4% -0.1% 0.3% 0.1% n.a. 6.2% Aruba -0.5% -0.2% 0.5% -0.9% n.a. n.a. United States 2.6% 1.6% 0.1% 1.3% 5.3% 4.9% Venezuela -5.7% to -6.2% -9.8% to -10.0% 116.2% to 121.7% 351.8% to 475.8% 7.0% to 7.4% 7.5% to 18.1% Netherlands *Sint Maarten data refer to % 2.2% 0.6% 0.3% 6.9% 6.0% 5 Economic development Curaçao I. Real GDP in Curaçao contracted by 1.0% in II. Zero inflation rate (0.0%) because the drop in energy prices was offset by the rise in food prices. 4% 3% 2% 1% 0% -1% -2% 0.3% 0.0% -0.5% -1.0% Real GDP Inflation Trend (Real GDP) 6 3

4 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% Inflation Core inflation excluding electricity prices Core inflation excluding fuel prices Core inflation excluding electricity and fuel prices 0.9% 0.4% 0.4% 0.0% Development in core inflation I. Core inflation is the long-run trend in inflation. II. By measuring core inflation as inflation excluding electricity and fuel prices, it seems that the zero inflation (0.0%) in 2016 becomes an inflation of 0.9%. 7 GDP by expenditure of Curaçao Domestic expenditure, of which: Private sector Investment Consumption Public sector Investment Consumption Foreign net expenditure, of which: Export of goods and services Import of goods and services Real GDP by expenditure Source: CBCS estimates; real percentage changes. 8 4

5 Sectoral performance in Curaçao in 2016 I. Decline in manufacturing sector: Decline in refining activities by the Isla refinery. Decline in ship repair activities. II. Decline in restaurants & hotels sector: Decline in stay-over tourism. Decline in cruise tourism. III. Decline in wholesale & retail trade sector: Decline in free-zone activities and tourism spending. IV. Decline in transport, storage & communication sector: Decline in air and sea transport. 9 Sectoral performance in Curaçao in 2016 (cont.) V. Decline in financial intermediation sector: Decline in domestic financial services. Decline in international financial services. VI. Growth in construction sector: Increase in private and public investments. VII. Growth in utilities sector: Increase in water and electricity 10 production. 5

6 Economic development Sint Maarten I. Real GDP shrank by 0.1% in II. Consumer price inflation fell to 0.1% in 2016 due to effects of lower international fuel prices. 5% 4% 3% 2% 1% 0% -1% 0.4% 0.3% -0.1% 0.1% Real GDP Inflation Trend (Real GDP) 11 GDP by expenditure of Sint Maarten Domestic expenditure, of which: Private sector Investment Consumption Public sector Investment Consumption Foreign net expenditure, of which: Export of goods and services Import of goods and services Real GDP by expenditure Source: CBCS estimates; real percentage changes. 12 6

7 Sectoralperformance in Sint Maarten in 2016 I. Decline in the wholesale & retail trade sector: Contraction in both domestic consumption and tourism spending. II. Negative turnaround in the construction sector: Decrease in building material imports. Slowdown in private investment. III. Negative turnaround in the real estate, renting & business activities sector: Decline in cruise tourism affected related businesses. Disappointing results in timeshare sector. 13 Sectoralperformance in Sint Maarten in 2016 (cont.) IV. High growth in manufacturing sector: Increase in yacht repair activities due to more yachts visiting Sint Maarten. V. Muted growth in transport, storage & communication sector: Slight increase in harbor-related activities. Growth in airport-related activities. VI. Slower growth in restaurants & hotels sector: Increase in stay-over tourism. Sharp decline in cruise tourism. 14 7

8 Economic Developments Labor market 15 Unemployment rate 25% 20% 15% 10% 5% 19.8% 19.3% 15.3% 14.4% 13.3% 13.3% 13.2% 11.4% 11.4% 10.0% 7.5% 6.2% 3.9% 0% Sources : IMF, Worldbank, Department of Statistics Sint Maarten, Central Bureau of Statistics Curaçao and Centrale Bank van Aruba *Sint Maarten data refer to 2017 **Aruba data refer to

9 Labor productivity Curaçao 4% 3% 2% 1% I. On average, labor productivity has contributed negatively to output growth over the period II. In 2016, labor productivity declined by -5.3% compared to -3.8% in % -1% -2% -3% Labor productivity Employment GDP 17 Economic Developments Public Sector 18 9

10 Main developments Curaçao I. Based on available data, the deficit on the current budget of the Curaçao government widened by NAf.36.5 million to NAf.38.1 million in II. III. The government issued a NAf.59.1 million bond that was allocated entirely to the Dutch State Treasury Agency (DSTA). Some revenues and expenditures have yet to be processed for the year 2016 which are expected to turn the budget deficit around into a surplus. 19 Budget development Curaçao NAf. million 2,500 2,250 2,000 1,750 1,500 1,250 1,661 1, , , , Budget balance (r.h.s.) Total expenditures Total revenues 20 10

11 Public debt and GDP: Curaçao 6,000 5,000 5,642 5,586 44% 46% 50% 45% NAf million 4,000 3,000 2,000 40% 2,496 2,545 40% 35% 30% 1,000 25% % Total public debt GDP Debt-to-GDP ratio (r.h.s.) 21 Main developments Sint Maarten I. Sint Maarten s government recorded a surplus of NAf.26.4 million on its current budget in 2016, an improvement compared to the deficit of NAf.18.4 million in II. III. The government will allocate NAf.20.0 million of this surplus for the compensation of deficits incurred in previous years. The primary balance recorded a surplus of 2.1% of GDP in 2016, up from the deficit of 0.3% of GDP in

12 Budget development SintMaarten NAf. million Budget balance (r.h.s.) Total expenditures Total revenues 23 Public debt and GDP: Sint Maarten NAf million 2,000 1,750 1,500 1,250 1, ,904 1,904 40% 36% 34% % 45% 40% 35% 30% 25% 20% 15% 10% Total public debt GDP Debt-to-GDP ratio (r.h.s.) 24 12

13 Tax burden as percentage of GDP 30% 25% 20% 15% 10% 5% 0% Average Sources: Interational Monetary Fund, Centrale Bank van Aruba, and Centrale Bank van Curaçao en Sint Maarten estimates 25 Tax burden and social contributions 60% 50% 40% 30% 20% 10% 0% United States Netherlands Canada Germany Mexico Curaçao* Tax burden as % of GDP Tax burden and social contributions as % of GDP Social contributions as % of GDP Average Sources: Financial Management Report of the government of Curaçao, Centrale Bank van Curaçao en Sint Maarten, and OECD *Curaçao started reporting social security contributions data as of January

14 Economic Developments External Sector 27 Main developments 2016 I. Widened current account deficit. II. Increased external financing. III. As foreign financing was more than sufficient to cover current account deficit, gross official reserves increased

15 Balance of payments (transaction basis, NAf. mln) Current account - 1, , ,035.0 Capital account External financing 1, , ,161.1 Change in reserves % Balance of payments developments (in % of GDP) 20% 15.3% 10% 10.9% 0% -10% -11.5% -20% -13.8% -30% Current account balance External financing of the private sector 30 15

16 International financial services 7% Contribution to foreign exchange income* in 2000 and 2016 Other services 16% Tourism 32% 2016 Merchandise excl. freezone Freezone 7% 6% Bunkering 10% Transportation 7% Refining 14% (Curaçao) International financial services 18% Tourism 14% Other services 11% 2000 Refining 16% Freezone 17% Bunkering 6% Merchandise excl. freezone 11% Transportation 7% *Income from the export of goods and services. 31 Contribution to foreign exchange income* in 2000 and 2016 (Sint Maarten) International financial services 2% Other services 11% 2016 Bunkering 1% Merchandise 10% Transportation 3% Other services International 7% financial services 2% 2000 Merchandise 10% Transportation 2% Tourism 73% Tourism 79% *Income from the export of goods and services

17 Tourism sector 2,000 1,600 1,675 1,534 NAf. million 1, ,090 1, Curacao Sint Maarten 33 International financial sector 450 NAf. million Net operational income Profit tax BRK windfall 34 17

18 Refining fee (Curaçao) NAf. million Monthly import coverage Months Import coverage norm Import coverage corrected for standing subscription Import coverage 36 18

19 Part II Monetary Developments 37 Main monetary developments I. Decelerated growth in money supply. II. During first half of 2016, increase in net foreign assets, moderated by decline in net domestic assets. III. During second half of 2016, increase in net domestic assets, mitigated by a decline in net foreign assets

20 Money supply 5,000 NAf. million 4,000 3,787 4,186 4,156 3,974 3, Net domestic assets Net foreign assets 39 Private credit extension 7,000 6,000 5,000 NAf. million 4,000 3,000 2,000 1,000 0 Loans to the private sector Monetary Union Loans to the private sector Sint Maarten Loans to the private sector Curaçao 40 20

21 Monetary policy stance in 2016 During first quarter of 2016: I. Reserve requirement was kept at 18.00% (since June 2014) 41 II. III. As of March 2016, Banks under the emergency rule are exonerated from the reserve requirement. At the bi-weekly auctions, higher amounts of certificates of deposit were auctioned against various maturities combined with higher interest rates. Monetary policy stance in 2016 As of the second quarter of 2016: I. Reserve requirement was kept at 18.00% (since June 2014) II. At the bi-weekly auctions, the Bank aimed only at the refinancing of maturing CDs

22 Part III Economic Outlook 43 Expected developments in the monetary union in 2017 and 2018 Current account balance (in mln NAf.) Change in gross foreign reserves of the central bank (in mln NAf.)* ** 2018** , , , Real GDP growth (%) Curaçao Sint Maarten Inflation (%) Curaçao Sint Maarten *- sign means an increase ** projection CBCS

23 Expected developments in Curaçaoin I. Curaçao s economy is projected to contract by -1.8% in 2017 due to declines in net foreign and private demand. II. Consumer price inflation is expected to increase to 1.5% because of a projected increase in international oil and food prices. Expected developments in Sint Maarten in 2017 I. Sint Maarten s real GDP is estimated to grow by 0.4% in 2017, driven by an increase in domestic demand. II. Inflationary pressures are expected to rise to 1.3% due to an increase in international oil prices

24 Expected developments in Curaçaoin I. Curaçao s real GDP is projected to grow by 0.3% in 2018 because of an increase in both private and public demand. II. Inflationary pressures are expected to ease slightly to 1.3% because the drop in international oil prices will be mitigated by an increase in local food prices. Expected developments in Sint Maarten in 2018 I. Sint Maarten s real GDP is estimated to grow by 1.6% in 2018, driven by increases in domestic demand and net foreign demand. II. Inflationary pressures are expected to ease slightly to 1.1% due to a decrease in international oil prices

25 Projection balance of payments (transaction basis, NAf. mln) ** 2018** Current account , , ,392.9 Capital account External financing , ,289.0 Change in reserves THEEND 25