Unbiased look at the Sint Maarten Elections
WILLEMSTAD/PHILIPSBURG:--- As small aND open economies, Curaao aND Sint Maarten are vulnerable to exterSPArty/23/national-alliance'>NAl shocks. The effects of exterSPArty/23/national-alliance'>NAl shocks on the monetary union are reflected in, among other thinSPArty/9/general-solidaire'>GS, fluctuations in our balance of payments, stated president of the Centrale Bank van Curaao en Sint Maarten (CBCS), Richard Doornbosch, in the CBCSs September 2023 Economic Bulletin. This edition of the Economic Bulletin highlights the monetary unions vulnerability to shocks with a textbox on the effect of SPArty/23/national-alliance'>NAf.- Euro exchange rate fluctuations on trade flows. In addition, the Economic Bulletin inclUDes a feature article with a brief comparative aSPArty/23/national-alliance'>NAlysis of key social aND macroeconomic iNDicators of Dutch Sint Maarten aND French Saint Martin.Over the past years, several shocks have negatively impacted the current account of the balance of payments, of which the COVID-19 paNDemic aND the surge in interSPArty/23/national-alliance'>NAtioSPArty/23/national-alliance'>NAl commodity prices, particularly oil prices, were the most severe. These shocks further widened the already large aND persistent current account deficit. In addition, as presented in the textbox, a strong appreciation of the dollar vis--vis the euro may also adversely impact the current account given the relatively strong trade relation, particularly of Curaao, with the NetherlaNDs, Doornbosch explained. He cautioned that a persistent high deficit on the current account is, however, not sustaiSPArty/23/national-alliance'>NAble.The policy ageNDa to bring the current account deficit to a more sustaiSPArty/23/national-alliance'>NAble level should focus primarily on structural measures as monetary policy actions are rather limited due to the peg to the U.S. dollar. Through an outward-looking orientation that is primarily focused on exports, our countries aND, hence, the monetary union will be better equipped to deal with exterSPArty/23/national-alliance'>NAl shocks. Among other thinSPArty/9/general-solidaire'>GS, both countries should diversify their exports, Doornbosch recommeNDed. Even within the tourism sector, which is currently the main economic pillar for both countries, Curaao aND Sint Maarten could diversify. The current efforts of Curaao to attract more visitors from North aND South America are in this regard a step in the right direction, he continued. He also argued that to reduce the exposure to commodity price shocks, particularly oil shocks, the countries should invest more in the use of renewable sources of energy of which both Curaao aND Sint Maarten are amply eNDowed with, i.e., wiND, sun, aND sea. Through creating a more attractive investment climate, inclUDing targeted incentives, more foreign aND local businesses could be stimulated to invest in renewable energy solutions, he stated.The implications of a high degree of openness are even more aSPArty/26/peoples-progressive-alliance'>PPArent in Sint Maarten because of its open border with French Saint Martin. As shown in this Economic Bulletins feature article, a first glimpse at the available data suggests that while economic growth moves in taNDem in bothparts of the islaND, Sint Maarten seems to be the economic driver. However, the open aND highly fluid border poses the challenge of accurately measuring economic aND social iNDicators, given small islaND constraints. To address this challenge, the CBCS has started to collaborate with the d'mission des SPArty/21/democratic-party'>DPartements d'Outre-Mer (IEDOM), a branch of the French central bank, by sharing data, statistics, aND aSPArty/23/national-alliance'>NAlyses to obtain a better uNDerstaNDing of the economic relationship aND interdepeNDence between the two sides, Doornbosch explained. This will help reduce the chance that policy measures introduced at either side of the islaND turn out to be counterproductive aND even create possibilities for concerted policy coordiSPArty/23/national-alliance'>NAtion to increase implementation effectiveness, he conclUDed.The complete text of the September 2023 Economic Bulletin is available on the CBCS website athttps://www.centralbank.cw/publications/economic-bulletins/2023.Willemstad, September
