Economic Outlook

source: Economic Outlook Aruba 2008

The economy of Aruba has shown over the years a stable growth, although in 2001 and 2002 the real GDP growth suffered a small decline of 0,7 and 0,3 respectively as a result of the effects of 9/11. In 2003 the economy picked up again. The expectations are that the economy will continue to grow in the coming years.

 The economic growth is mainly based on the developments in the tourism sector. Aruba is a primary tourism destination that continues to attract tourism related investments and tourists. Still the aim to diversify the economy continues to be a priority. In this respect a competitive investment climate has to be created that stimulates a sustainable economic development. Entrepreneurship and innovation, capital intensive investments and knowledge economy will be the focus in the coming years.

Economic Outlook

EIU 2008 Country Report for Aruba

An election is due in September 2009. With the economy set to slow and
possibly move into recession, the government of the prime minister, Nelson
Oduber of the Movimento Electoral di Pueblo (MEP), might struggle to retain
power for a third four-year term. The opposition Arubaanse Volks Partij (AVP)
will seek to take electoral advantage of the government!s lax fiscal policy and of the economic slowdown. Economic growth is set to slow from its solid rates of recent years as US tourism demand falls off in the context of a recession in 2009 and a weak recovery in 2010. International financing woes will bring a fall in inward investment, exerting a further drag on domestic economic growth. Private consumption, which has been squeezed by high inflation in 2008, will receive some respite as lower commodity prices help to bring inflation back down below 5%.

The Centrale Bank van Aruba (the Central Bank) has warned that the global
financial crisis is set to affect investment and tourism. Although the domestic
financial sector remains sound, financing woes will reduce inward investment.
The Central Bank is also optimistic that inflation has peaked. Preliminary data suggest that tourism arrivals started to slow in the third quarter. Inflation remains high, but started to fall in September. Hurricane damage has reduced output at the Valero Aruba oil refinery.

The Global Financial Crisis and The Aruban Economy

Source:Central Bank of Aruba Press Release. October 9, 2008

Like many other central banks, the Centrale Bank van Aruba (CBA) is closely and continuously monitoring the developments in the financial markets and their effect on, among others, exchanges rates, oil and gold prices, and assessing the financial and economic impact of the ensuing financial crisis for the economy of Aruba.

With respect to the financial sector, preliminary information obtained from the financial institutions supervised by the CBA indicate that the international financial turmoil has had so far limited effect on their financial position.

In general, the Aruban banks and insurers only have a small part of their
funds invested abroad. Notable is also that the commercial banks mainly lend to residents and, thus,have little foreign exchange exposure originating from their loan activities.

On the economic side, the current credit crunch on the international markets will likely make it more difficult for foreign investors to continue to invest in Aruba.