Maria: Island’s economy
successful and resilient
BELAIR--St. Maarten’s economy proves to be resilient with consistent development and an average Gross Domestic Product (GDP) of 4.8 per cent over the past five years, according to Economic Affairs Commissioner Maria Buncamper-Molanus.
Giving an overview of the island’s economy at her first State of the Economy forum held in the Belair Community Centre Thursday, the commissioner said high confidence in the economy’s potential and investments by stakeholders had kept the economy thriving.
Guest speaker for the forum was Central Bank President Emsley Tromp. He said that while the economy was successful it was fragile and open to external shocks.
Also speaking at the forum, Commissioner Sarah Wescot-Williams said the island’s spectacular growth of the past years was beginning to taper off, but remained impressive. Preparations need to be made for the pre-construction boom, she added.
“The economy of St. Maarten continues to expand [with] relatively consistent GDP and inflation which are hallmarks or trademarks for any healthy economy,” she said. Despite this, the island’s development is slowing, she added. “The objective now is to change our approach and focus on managed growth. The managed growth approach includes economic diversification, the development of complementary alterative industry that will cushion the economy from internal and external shocks.”
Growth was recorded in the financial and construction sectors while there was a stable flat line in the tourism and hospitality sector. Inflation has been “well contained,” she added. Overall price levels have remained stable in the past 10 years, with consumer prices rising two to three per cent. Rising demand for corn and wheat, and high oil prices were cited as the cause for price increases.
In the labour market, after employment dips after Hurricanes Luis and Lenny, as well as 9/11, the labour force grew from 16,000 persons in 2006 to 20,000 last year, based on Central Bureau of Statistics data. Fewer persons have been recorded as earning minimum wage, while the higher income brackets have been on the rise, triggering the establishment of more added value businesses, she said.
The rate of unemployment dropped from 17. 5 per cent 10 years ago to 10.6 per cent in 2007 as a result of expanding economic development. “This is a promising development for St. Maarten.”
Turnover Tax (TOT) increased from NAf. 42.9 million in 2002 to NAf. 74.3 million last year, according to the commissioner. High growth was recorded in 2004 and 2005 during the island’s construction peak.
However, after completion of major projects such as the new Princess Juliana International Airport terminal building in 2006, “the growth rate began to ease considerably, a clear indication of slower growth momentum.” The total TOT shows a contraction of five per cent in 2007 relative to 2006.
Cruise arrivals continue to outstrip stay-over tourism, but numbers have remained flat (1.4 million) in the past two years compared to the 1.5 million arrival peak in 2005. The number of stay-over visitors has averaged about 460,000 annually since 2003. Efforts are being made to increase airlift servicing the island as a way to entice more stay-over visitors as the room inventory grows. Room inventory now stands at 4,629 units compared to 4,068 in 1995, prior to Hurricane Luis.
Government revenue collection supports the idea of a growing economy, Buncamper-Molanus pointed out. As more people earn higher incomes, wage tax collection continues to grow while tourism-related taxes remained flat.
The forum doubled as the launch of the Sector Economy Affairs Website
http://stmaarteneconomy.com/ and the presentation of St. Maarten Economic Outlook Booklet 2008.
