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Saturday 10 November 2018

Marginal economic growth forecasted for 2019

ORANJESTAD — The Centrale Bank The tourism outlook for 2019 is
van Aruba (CBA) published the positive with tourism service ex-
Economic Outlook for 2019. This ports growing by 0.9 percent (real
publication also includes updated terms), spurred again mainly by
projections for 2018 to reflect the the U.S. market.
most recent developments and Various large projects that are on-
data. going and/or planned to be exe-
cuted in 2018 include continuation
The Aruban economy is expect- of the renovation of the Dr. Hora-
ed to decline in real terms by 0.5 cio E. Oduber hospital, continua-
percent in 2018. Compared to tion of the Watty Vos Boulevard
the previous forecast, published project, upgrading activities at the
in April 2018, the growth rate was airport, and various tourism-related
adjusted downwards by 0.8 per- projects. Investment in 2019 is ex-
centage point. A marginal growth pected to expand significantly.
of 0.1 percent is projected for 2019. This predicted expansion can be inflationary effect for the rest of the Afl. 33 million and Afl. 44 million,
In 2018 and 2019, the economic mainly attributed to the Gateway year. The crisis levy is expected to respectively. Net inflows related
output is driven mainly by tourism 2030 project (expansion and mod- push up inflation by 0.9 percent- to investment projects, real estate,
exports. Subdued consumption ernization of the airport), the final age point in both 2018 and 2019. and timeshare sales will likely lead
and uncertainty with regard to the phases of both the hospital, and Aruba is expected to have a sur- to a net inflow of direct investment,
execution of various investment the Watty Vos Boulevard, and sig- plus on the current account of the while the government is expected
projects are expected to hinder nificant investments by WEB. Nev- balance of payments in both 2018 to issue a smaller amount of foreign
significant output growth. The intro- ertheless, execution of investments and 2019, based primarily on tour- debt going forward.
duction of the crisis levy in July 2018 projects are subject to delays and ism income. However, this surplus Consequently, in 2018, total net
will likely impact economic activi- uncertainties. will likely be small (less than Afl. 11 foreign assets (excluding revalua-
ties through reduced consumption The (12-month average) infla- million) compared to the previous tion differences) are forecasted to
in both 2018 and 2019. tion rate is projected at 3.4 per- three years. fall by Afl. 33.5 million to Afl. 1,651.3
Tourism service exports are fore- cent and 2.3 percent in 2018 and The capital and financial account million, and likely decrease further
casted to grow by 1.5 percent (in 2019, respectively. The Venezuelan (excluding banking transactions to a level below Afl. 1.6 billion at
real terms) in 2018. This growth is trade embargo caused food pric- and the change in reserves) is ex- the end of 2019 under no change
due to a projected rise in tourist ar- es to increase in the first quarter of pected to show a smaller deficit in monetary, foreign exchange
rivals from the U.S. market. 2018, which also will likely have an in both years compared to 2017, and economic policies. Total re-
serves are thus expected to be
equivalent to 5.0 months of current
account payments (including oil)
in both 2018 and 2019.
To foster economic growth and re-
duce downward pressures on the
international reserves, significant
investments and policy efforts are
required to expand economic out-
put and strengthen economic resil-
ience against external shocks. The
forecasted economic growth is
thus subject to considerable down-
side risks.q