CBCS says St. Maarten is still growing, but the world is getting more dangerous

GREAT BAY--St. Maarten’s economy is still expected to grow in 2026, but the message from the Centrale Bank van Curaçao en Sint Maarten is clear: this is not the time for comfort. In its March 2026 Economic Bulletin, the CBCS says the country is benefiting from tourism, construction and steady demand, but it is also standing in the path of forces it cannot control, including war, oil price shocks, shipping disruption, inflation and climate risk. In simple terms, the Bank is saying that St. Maarten is doing reasonably well for now, but the outside world is becoming more unstable, and that instability can quickly reach local businesses, households and government finances.

The CBCS says St. Maarten’s economy grew by 3.4% in 2025 and is expected to grow by 2.4% in 2026. That means the economy is still expanding, just at a slower pace. Inflation, which is the general rise in prices, is projected to move from 1.6% in 2025 to 1.9% in 2026. The current budget balance is expected to remain positive, though slightly lower, moving from 1.0% of GDP in 2025 to 0.8% in 2026, while the public debt ratio is projected to edge down from 43.0% to 42.7%. On paper, those are not crisis numbers. They suggest an economy that is functioning and a government that is not, at least for now, in immediate fiscal trouble.

But numbers like growth and inflation can be misleading if they are read without context. What the CBCS is really warning is that St. Maarten’s economy remains highly exposed because it depends heavily on imports, tourism and outside conditions. The island does not produce most of what it consumes. It imports food, fuel, many building materials and most consumer goods. It also depends heavily on visitors arriving from abroad and spending money in hotels, restaurants, transport, retail and activities. That means any shock to oil prices, shipping routes, airline demand or foreign household spending can quickly hit St. Maarten, even if the problem starts thousands of miles away.

That is why the Bank puts so much emphasis on the conflict in the Middle East. The CBCS says that attacks on oil facilities and transport infrastructure, along with the effective closure of the Strait of Hormuz, have increased the risk of oil supply disruption and higher energy prices. That matters to St. Maarten because oil is not just about gas at the pump. Higher oil prices can raise electricity costs, freight charges, insurance costs, airfares and the cost of imported goods. In everyday terms, that can show up in supermarket prices, utility bills, transportation costs and the operating expenses of nearly every business on the island.

The report goes further by asking a simple question: what happens if oil prices really jump? The CBCS included two shock scenarios. In the more moderate one, based on a three-month disruption and average oil prices of about US$100 per barrel in 2026, St. Maarten’s growth would fall from 2.4% to 1.4%, while inflation would rise to 3.6%. In the more severe scenario, based on a six-month disruption and oil prices around US$150 per barrel, St. Maarten’s growth would drop to just 0.6% and inflation would rise to 6.0%. That is the Bank’s way of saying that a global oil shock would not just make life more expensive, it could also slow the economy almost to a crawl.

For ordinary people, that kind of situation is especially painful because it creates what economists call a double squeeze. Prices go up, but the economy slows down. Families pay more for basics while businesses face weaker demand. Employers become more cautious. Government faces more pressure to help, but has less room to spend freely. In plain language, it is the kind of environment where everyone feels pressure at once, consumers, companies and the public sector. That is why the CBCS describes the impact of an oil shock as both significant and persistent.

One of the most relevant points for St. Maarten is that inflation on the island is often driven by a few basic but important items: electricity, fuel and food. The Bulletin’s review of the third quarter of 2025 notes that these are key drivers of inflation in Sint Maarten. It also explains that the category “housing, water, electricity, gas and other fuels” carries major weight in the consumer basket. In other words, even small shifts in electricity or fuel can have a large effect on what people feel in their daily lives. While electricity and fuel prices actually fell in part of 2025, food prices still increased, and the Bank warns that future global shocks could quickly reverse those declines.

A person may hear that inflation is under 2%, but still feel squeezed because groceries, transport, health care, restaurant prices and household costs are all taking a larger share of income. The CBCS data shows exactly why that feeling exists. In Sint Maarten, food prices rose, health prices rose, restaurant and hotel prices rose, recreation prices rose and clothing prices rose. So even when the overall inflation number looks moderate, the pressure can still be very real in the categories people deal with most often.

The good news in the report is that tourism is still carrying the economy. The Bank says St. Maarten’s stronger-than-expected 2025 performance was driven largely by tourism, especially stay-over and cruise arrivals. That tourism activity then spilled over into other sectors, including transport, trade and construction. Private investment also continued, supported by smaller residential projects, even after the major airport reconstruction phase eased. In simple terms, tourism is still the main engine, and when that engine runs well, many other parts of the economy move with it.

If foreign tourists pull back because of higher travel costs, lower disposable income or broader global uncertainty, St. Maarten has limited protection. The CBCS specifically warns that if geopolitical tensions continue to push up oil, freight and insurance costs, that could weaken tourism demand. That matters because tourism is not a side sector in St. Maarten, it is central to jobs, business activity and tax revenue. A decline in tourism would affect far more than hotels. It would reach taxi drivers, restaurants, retailers, excursion operators, wholesalers and government collections.

The Bulletin also points to another risk that often gets less attention: implementation. The Bank says both countries continue to face problems carrying out public investment as planned. Budgets may include projects, but actual execution often falls short. That matters because delayed public investment can hold back growth, infrastructure improvement and private-sector confidence. For St. Maarten, this is an important warning. It is not enough to announce roads, drainage works, port-related upgrades or other infrastructure. If implementation lags, the economy loses part of the support that those projects are supposed to provide.

Another issue the Bank raises is climate vulnerability, and here St. Maarten stands out even more sharply. The CBCS says extreme weather remains a major downside risk and notes that the risk is particularly high for Sint Maarten because of its location in the hurricane belt. This is not just about storm damage after a hurricane passes. Climate-related shocks can disrupt tourism, damage infrastructure, interrupt business activity, slow construction and push up insurance and food import costs. So when the Bank talks about resilience, it is talking not only about money and debt, but also about whether the country is physically and institutionally prepared for shocks.

On government finances, the report is more reassuring, but still cautious. St. Maarten’s current budget moved from balance in 2024 to a 1.0% surplus in 2025, and is expected to stay positive at 0.8% in 2026. The public debt ratio rose to 43.0% in 2025 after the issuance of a bond loan to finance public investment, but it is projected to dip slightly in 2026 because the economy is still growing. In everyday terms, that means the government’s debt load is still manageable, but not something to ignore. The Bank’s message is that debt is under control for now, but the country remains vulnerable if a serious shock hits.

The CBCS says debt remains manageable under the baseline outlook, helped by economic growth, continued access to favorable Dutch financing and debt that is mostly in local currency, which reduces exchange-rate risk. However, the Bank also says those debt paths are vulnerable to external shocks and do not fully account for long-term pressures such as aging populations and rising health and social insurance costs. Put plainly, the debt picture looks stable if things go more or less according to plan. It looks less comfortable if the world turns sharply against small island economies.

The report also spends time on the Caribbean guilder’s peg to the U.S. dollar, and that matters more than many people realize. A currency peg means the local currency is tied to the U.S. dollar at a fixed rate. The CBCS argues that keeping that peg remains the right choice because more than 65% of international transactions in the monetary union are conducted in U.S. dollars, and the United States remains the most important trading partner. The peg helps reduce uncertainty, lowers transaction costs and supports price stability. In simple language, it gives the economy an anchor.

The Bank explains that when the U.S. dollar moves against the euro and other currencies, there are effects. A weaker U.S. dollar can make imports from Europe more expensive, which can feed inflation. At the same time, it can make Curaçao and Sint Maarten relatively cheaper for European visitors, which could help tourism. It can also attract more European investment, especially into sectors like tourism and real estate. But that too has a downside, because stronger foreign demand can push up property prices and make asset ownership less accessible for locals. So even the stability of a peg comes with trade-offs.

The CBCS is not saying that St. Maarten is entering a downturn. It is saying that the country needs stronger buffers before the next shock arrives. Those buffers include healthier public finances, better execution of public investment, lower dependence on imported energy, improved logistics infrastructure and targeted social support for the most vulnerable rather than broad tax cuts that benefit everyone equally. The Bank is especially clear that if inflation rises again, governments should focus on targeted help for people who depend on social benefits, not broad gasoline tax reductions or other across-the-board relief that weakens fiscal discipline.

When fuel prices rise, there is often public pressure for broad tax cuts or price relief. But the CBCS is warning that such moves can reduce government revenue without solving the deeper problem. Its position is that support should be directed where it is needed most, while the country continues investing in the kinds of structural changes that actually lower vulnerability over time, especially renewable energy and stronger transport and storage capacity.

For St. Maarten, that may be the most important takeaway from the entire report. The issue is not whether the island can survive one difficult year. It is whether it can become less fragile. As long as the country remains highly dependent on imported fuel, imported food, imported goods and visitor spending, it will remain exposed to shocks it did not create and cannot stop. The CBCS is effectively saying that resilience has to be built before the next crisis, not during it.

So what does this Bulletin really say in plain English? It says St. Maarten is still moving forward, but on a narrow ledge. Tourism is strong, growth is positive and public finances are not in immediate distress. But the island remains one major external shock away from slower growth, higher prices and deeper social strain. The global environment is becoming harsher, not easier. The question now is whether policymakers use this relatively stable period to strengthen the country’s defenses, or wait until the next shock forces their hand.

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