Docstoc

Aruba_Economic_Outlook_2009

Document Sample
Aruba_Economic_Outlook_2009 Powered By Docstoc
					                     ECONOMIC OUTLOOK


                            ARUBA


                             2009




Directie Economische Zaken, Handel en Industrie
Department of Economic Affairs, Commerce and Industry
PUBLISHER
The Government of Aruba




FOR FURTHER INFORMATION
The Department of Economic Affairs,
Division Economic Policy and Development Cooperation
L.G. Smith Blvd. # 160
Oranjestad
Aruba


Tel: (297) 582-1181
Fax: (297) 583-4494
E-mail: deaci@setarnet.aw
Website: www.arubaeconomicaffairs.aw


PRINTING, DESIGN AND LAYOUT
Interprint Aruba




Information in this publication may be published without prior
permission, provided the source is acknowledged.
TABLE OF CONTENTS

FOREWORD.................................................................................................................................. 7
ACKNOWLEDGEMENTS............................................................................................................ 9
EXECUTIVE SUMMARY ........................................................................................................... 11
INTRODUCTION ......................................................................................................................... 17
1. THE WORLD ECONOMY .................................................................................................... 18
     1.1 GLOBAL PERSPECTIVES ................................................................................................... 18
     1.2 COUNTRY AND REGIONAL PERSPECTIVES ...................................................................... 24
     1.3 GLOBAL EFFECTS ON THE ARUBAN ECONOMY ................................................................ 30
2. TOURISM ................................................................................................................................ 33
     2.1 ARUBA TOURISM REVIEW 2007 ........................................................................................ 33
     2.2 TOURISM IN THE CARIBBEAN ............................................................................................ 40
3. SECTORAL DEVELOPMENTS IN ARUBA ....................................................................... 48
     3.1 AGRICULTURE, MANUFACTURING INCL. OIL REFINING ................................................... 50
     3.2 UTILITIES ........................................................................................................................... 51
     3.3 CONSTRUCTION ................................................................................................................ 52
     3.4 TRADE ............................................................................................................................... 56
     3.5 HOTELS AND RESTAURANTS ............................................................................................ 57
     3.6 TRANSPORT, STORAGE AND COMMUNICATION ............................................................... 57
     3.7 HOUSING ........................................................................................................................... 60
     3.8 PUBLIC ADMINISTRATION AND EDUCATION ..................................................................... 60
4. MACROECONOMIC DEVELOPMENTS............................................................................. 65
     4.1 MACROECONOMIC DEVELOPMENTS 2007 ....................................................................... 65
     4.2 FORECASTING ERRORS .................................................................................................... 70
5. OUTLOOK 2008-2009 ........................................................................................................... 73
     5.1 ASSUMPTIONS ................................................................................................................... 73
     5.2 PROJECTIONS ................................................................................................................... 76
     5.3 RISKS ................................................................................................................................ 86
6. APPENDIX .............................................................................................................................. 89
FOREWORD

This second edition of the Economic Outlook for Aruba         has been
prepared in a time in which we are living uncertain moments with regard
to the financial and economic developments in the world. Aruba’s
economic performance depends on tourism related activities which
make us very vulnerable to external shocks, especially fluctuations in
the economy of the USA. Still, it is necessary to use these times of
uncertainty to create new opportunities for the future.


Aruba has gone in the past through several economic shocks, such as
the closure of the Lago refinery in 1985, the economic crisis in 1992,
the effects of 9/11 in 2001, and the effects of the missing US teenager
in 2005. All those events marked a period in our lives and especially in
the economy of Aruba. It shows us how vulnerable our economy is but
at the same time it shows us that we can overcome those effects. We
have done this in each of those moments in the past. Even though at
this time it is not clear what and for how long the effects of the
international financial/economic crisis will be on the economy of Aruba,
we are anticipating a lower economic growth for 2009 and even a
decline.


In this Economic Outlook 2009 we will present you with three different
scenarios based on assumptions of how our economy will react to the
effects on the tourism market as a result of the international financial
crisis. But at the end the economic performance will be a result of how
we, government and private sector, prepare ourselves to react to the
external shocks that will come in the coming months.



                                                                      7
All together the private sector and the government will need to join
forces to overcome these effects by engaging in a continuous
partnership to stimulate communication between the stakeholders to
protect our tourism industry and our economy in general.


Minister of Finance and Economic Affairs


Mr. N. J.J. Swaen




8
ACKNOWLEDGEMENTS


Producing an economic outlook is a combined effort between several
stakeholders. The data have to be collected and analyzed before it can
be used in the MARUBA model. Scenarios are produced based on
assumption which are discussed with stakeholders of the local
economic sectors. Furthermore the developments in the international
economy are followed and analyzed.


For the Economic Outlook 2009 de Department of Economic Affairs,
Commerce and Industry (DEACI) received the input of several
stakeholders in the private sector and from the Commission Macro
Model (CMM). The CMM is formed by the Central Bank of Aruba, The
Aruba Investment Bank, the SIAD, the Department of Finance, the
CBS, the SER and the DEACI. We want to express our thanks to the
experts in the CMM, the Aruba tourism Authority, the tourism industry,
the commercial businesses and government departments who have
given their valuable support to produce this outlook. Furthermore the
efforts of the team within the DEACI that is responsible for the
production of the Economic Outlook 2009, Ms. Esther Willems and Ms.
Esther Tiemes.




                                                                    9
Producing the Economic Outlook 2009 for Aruba has been a
tremendous     challenge     in   this   time    of    uncertainty.   The
financial/economic crisis in the world has been changing the
international outlooks dramatically in the last two months, resulting in
daily adaptations of the data. Projecting the future is usually a difficult
task in which many variables have to be taken into consideration but
predicting what will happen in 2009 is a huge challenge.


Maria Dijkhoff-Pita
Director DEACI




10
EXECUTIVE SUMMARY


In this publication the economic developments in the year 2007 and the
prospects for 2008 and 2009 are presented. For the quantitative
projections the macro-economic model MARUBA was used. Important
sources of data for this outlook include the Central Bureau of Statistics
(CBS), the Central Bank of Aruba (CBA), the Department of finance, the
Tax Department, AIB Bank N.V., the Social Economic Council, the
Aruba Tourism Authority (ATA) as well as other government
departments and interviews with key stakeholders.


The global economy has entered a period of turmoil in the past year.
The year has been characterized by major corrections in housing
markets in a number of economies, financial distress, and by surges in
the prices of oil and food. These developments have led to slow
economic activity, as consumer and business confidence falls in the
face of poor job and profit prospects. Weakness is expected to be
mainly, though not exclusively, located in advanced economies. Growth
is expected to decelerate in emerging and developing countries At the
same time global inflation has been high over the past year. The main
sources of this inflation have been high commodity prices, and financial
conditions such as low interest rates and the depreciation of the dollar.
Food prices had been increasing in the context of increasing demand
from emerging market economies, demand from the bio-fuel industry
and unfavorable weather conditions. Lately however oil and food prices
have been stabilizing, although still remain at high levels compared to
previous years. Consequently inflation is expected to moderate in 2009
in emerging and developing economies as well as in the advanced
economies. An important factor contributing to the current slow-down in

                                                                      11
economic growth is the financial crisis. At the root of the unraveling of
the mortgage market is the housing bubble in the US, which burst in
August of 2007. The decrease in housing prices following the bubble
has caused major problems for financial institutions, undercapitalized
banks and mortgage lenders. Resolving these problems and restoring
confidence and liquidity in global financial markets is likely to remain a
drag on the global economy. The global economy moderate from 5.2
percent in 2007 to 3.4 percent in 2008 and is expected to fall to 0.5
percent growth in 2009. A very gradual recovery is expected in 2010
reaching a 3 percent growth. However, the global outlook is high
uncertain and pace of recovery depend highly on solid policy actions.


Global tourism has also been cooling after a strong start of the year, as
consumers start spending more carefully. The slow-down has been
most pronounced in Asia and the Pacific. The Americas, Africa and the
Middle East have also been feeling the effects on their tourism industry
but to a lesser extent. The airline industry is suffering from high fuel
prices and may start cutting frequencies and certain routes. It is looking
like the Caribbean has had more arrivals in 2008 than in 2007, but the
increase has mainly been witnessed in the first few months of the year.
The Caribbean however is expected to fare relatively well in this global
downturn, because the Caribbean tends to be more familiar, closer to
home and often less expensive for US citizens compared to other
destinations. This does not mean that the Caribbean is sheltered from
the global economic downturn, and many Caribbean destinations are
devising plans to limit the damage to their tourism industry. Aruba’s
tourism industry, together with the Aruba Tourism Authority has
invested in a comprehensive contingency plan based on maintaining
the high quality reputation and increasing effectiveness of marketing.

12
The overriding idea is that short term planning to avert or limit a
downturn should not jeopardize long-term necessity for market stability.
This is why underlying global trends in tourism, such as women
travelling without men, grandparents bringing grandchildren on
vacation, spontaneous travel and religious traveling should be followed
closely as they can present business opportunities to destinations. The
effects of climate change on tourism are also very important to monitor
and prepare for, since in many destinations, such as Aruba, tourism is
closely connected with the natural environment.       At the same time,
visitors are become more environmentally conscious.


In 2007 the tourism sector witnessed       a recovery from the drop in
economic activity that took place in 2006. Indicators, such as the
number of stay-over visitors, visitor nights, the average daily rate and
average length of stay confirm this recovery. This recovery mainly
stems from the US, Canadian Colombian and Venezuelan markets.
This growth was stimulated by the increase in room capacity due to the
opening of the RIU in October of 2007, the opening of 138 extra
timeshare rooms by the Marriot and the expansion of 245 hotel rooms
by Divi Village and Aruba Phoenix resorts.


The growth in tourism is also indicated by the PAEI (Partial Economic
Activity Index) which indicated that the hotel and restaurant sector grew
with 5.6 percent in 2007. The trade, utilities and housing industry also
grew according to the PAEI while the public administration and
education sector, as well as the transport, storage and communications
and construction industries shrank in 2007. Trade increased by 8.6
percent mainly due to the increase in imports of pharmaceutical goods
and other retail of specialized goods. The utilities sector also witnessed

                                                                       13
more economic activity as water and electricity consumption increased.
Investment in the sector were planned for the creation of the
infrastructure for a windmill park by W.E.B Aruba N.V. and for the
expansion and upgrading by ELMAR N.V. Conversely, the transport
storage and communication sector decreased seeing that commercial
landings, vessels entering the port, and the number of passengers
transported by the public transportation company decreased. With
respect to the construction sector, this sector decreased in 2007 as
imports of cement and other construction materials decreased and high
construction costs. While the activity in this sector may have slowed,
there are still many private real estate projects in the pipeline for the
2008-2012. The public administration and education sector also
decreased in economic activity as expenditures on personnel
decreased and inflation increased. Investments were made in the
context of the long-term program of the FDA in order to achieve a
sustainable development. One of the main activities within this program
is the created National Integral Strategic Plan. Other public investments
focus on education, increase the development possibilities of vulnerable
groups, improvements in law enforcement and public order.


From a macroeconomic perspective, in 2007 the GDP grew with 2
percent. The source of this growth was mainly located in the tourism
sector that led to an increase of export revenues. This growth
compensated for the slow-down in investments as major investment
projects were completed. In this year consumption increased as well,
supported by the increase in tourism revenues. At the same time
however a turnover tax was introduced, which despite compensations in
the form of an increase in the minimum wage and lower wages and


14
income taxes, and inflation (which was high largely due to global
influences) made consumers spend more conservatively.


The projections for the outlook 2008 and 2009 are based on an
increase of the number of tourism arrivals of 5.5 percent for 2008 and a
decrease of 7.5 percent in 2009. This projection is mainly based on the
expected occupancy, airlift, marketing and room capacity and prospect
for tourism growth in the Caribbean. There is a great deal of uncertainty
around the projections. The outlook for cruise tourism for 2009 is set on
zero growth compared to 2008.


Growth in the value of the export of goods and services will cause a real
growth in GDP of approximately 1.3 percent in 2008. This will result in a
nominal GDP of Afl. 4.9 billion in 2008. This is mainly due to a strong
growth in the first months of 2008 which was made possible by a large
increase in the supply of hotel and timeshare units. Consequently, the
export revenues, mainly from stay-over tourism, are estimated to grow
with 3.3 percent in 2008.


In the previous years the import price was mainly explained by the
inflation of the US due to the large share of imports originating in the
US. However, we now see that since 2007 the development of the
international price of crude oil and the exchange rate of the US dollar in
comparison to the Euro have been influencing largely the increase of
the import price of Aruba. As a result, the inflation has been strongly
affected in 2008. The period average inflation was 8.0 percent in 2008,
which contributed to a decline in the private consumption of 0.8 percent
and investments of 0.5 percent.


                                                                       15
Moreover, after the financial crisis was deepened Aruba started to
experience a decline in the number of stayover visitors in the last
months of 2008. This development is expected to prolong and will affect
the tourism industry in 2009. Consequently, the real GDP will shrink
with 2.1 percent in 2009. The private investment will be limited to a zero
growth in real terms. Private consumption is estimated to drop with 0.7
percent in real terms.


While the value of the import of goods and services is projected to grow
with 1.2 percent in 2008, in 2009 it is estimated to drop with -2.0
percent in real terms.




16
INTRODUCTION


The booklet that lies before you is the second annual economic outlook
publication for Aruba . The purpose of this publication is to provide a
general overview of economic developments in the world and in Aruba
in particular and to provide projections of the main economic indicators
for the year 2008 and 2009.


For the quantitative projections the macro-economic model MARUBA
was used. This model has been built according to the system of
National Accounts. These accounts are composed by the Central
Bureau of Statistics using the system of national accounts (SNA) of
1993. Important sources of data for this outlook include the Central
Bureau of Statistics (CBS), the Central Bank of Aruba (CBA), the
Department of finance, the Tax Department, AIB Bank N.V., the Social
Economic Council, the Aruba Tourism Authority (ATA) as well as other
government departments and interviews with key stakeholders.


The first chapter describes economic developments on the global,
regional and country level and the effects on the Aruban economy.
Chapter 2 describes developments in the tourism sector in the year
2007 and the developments in the Caribbean. Then, in chapter 3 the
developments that have taken place in the different economic sectors
are reviewed. Furthermore, in chapter 4 we look at the developments in
the year 2007 from a macroeconomic point of view. And finally, the
macroeconomic outlook for 2008 and 2009 will be presented.




                                                                     17
1. THE WORLD ECONOMY


This chapter provides an overview of the global context in which the
Aruban economy functions. First attention is drawn to the global
economy and inflation in advanced and emerging and developing
countries. The second section of this chapter looks at the economic
outlooks of specific countries and regions. We then look at how the
Aruban economy is related to the global economy. This chapter is
based on the IMF World Economic Outlook of October 2008 unless
                           1
mentioned otherwise .




1.1 GLOBAL PERSPECTIVES


1.1.1 Global Economy
The global economic landscape over the past year has been
characterized by major changes in housing markets in a number of
advanced countries, a deepening crisis in financial markets and by
surges in commodity prices. In September of 2008, about a year after
the initial warning signs of financial distress, a new phase of financial
turmoil started as confidence in global financial institutions was badly


1
    Key assumptions IMF World Economic Outlook 2008 Update (January 2009) built into
the forecast:
      1.   Comprehensive actions by the US and European governments succeed in
           stabilizing financial market conditions and avoiding further systemic risks, yet it
           will take time to rebuild confidence in asset valuations and alleviate
           counterparty concerns

      2.   Prices of petroleum would average about $50 in 2009, in line with pricing in
           forward markets.

18
shaken and as large financial institutions went bankrupt, were taken
over, were forced to merge or required public intervention. Liquidity on
the interbank market dried up as well, as confidence in counterparties
decreased significantly. Apart from the direct impacts of the financial
crisis, these developments have also led to slowing economic activity,
as consumer and business confidence falls in the face of poor job and
profit prospects. In this environment the global economy has slowed
down noticeably and prospects for the near future are not very positive
with most risks being on the down side. The global economy moderate
from 5.2 percent in 2007 to 3.4 percent in 2008 and is expected to fall to
0.5 percent growth in 2009 (see table 1). This is the lowest rate since
World War II. Despite wide of different policy actions, the financial
market remained extremely difficult for a longer period than expected in
the last months of 2008. A very gradual recovery is expected in 2010
reaching a 3 percent growth. However, the global outlook is high
uncertain and pace of recovery depend highly on solid policy actions.


The weakness in global markets is mainly located in the advanced
economies. In the last quarter of 2008 and the first quarter of 2009 the
US economy has been facing no growth or even negative growth as
tight financial conditions are increasingly being felt, despite the different
fiscal stimulus. Most other advanced economies are expected to go
through a similar period of         slow economic growth. Growth in
developing and emerging economies is also projected to decelerate
sharply from 6.3 percent in 2008 to 3.3 in 2009. The main driver for this
fall are lees export demand, financing, lower commodity prices and
much tighter external financing constrains especially for economies with
larger external imbalances.


                                                                          19
The risks to these projections are mainly on the downside as financial
stress could continue at very high levels and because credit constraints
arising from cleaning up the balance sheets of financial institutions
could be deeper and more prolonged than envisaged in the baseline
scenario. Inflation risks are more balanced in light of the lower
commodity prices and the slowing global economy. With respect to
global imbalances, risks of protectionism in light of the stalling of the
Doha Round of trade talks can also form a drag on the global economy,
as well as risks created by the recycling of surplus from oil-exporters.




20
Table 1 World, Regional and Country Indicators and Projections.
                             Real GDP growth      Consumer Inflation
                             2007   2008   2009   2007      2008       2009
World economy                5.2    3.4    0.5    …         …          …
Advanced economies           2.7    1.0    -2.0   2.1       3.5        0.3
Emerging market and          8.3    6.3    3.3    6.4       9.2        5.8
developing countries


US                           2.0    1.1    -1.6   2.7       2.2        1.6
Euro area                    2.6    1.0    -2.0   2.2       2.5        1.5
The Netherlands*             3.5    2.3    -0.8
                                                  1.6       2.8        3.3

Latin America and the        5.7    4.6    1.1    5.4       7.9        7.3
Caribbean
Argentina**                  8.7    6.5    3.6    8.8       9.1        9.1
Brazil                       5.7    5.8    1.8    3.6       5.7        5.1
Venezuela, Rep.** Boliv.de   8.4    6      2      18.7      27.2       33.5
Colombia**                   7.7    4.6    3.5    5.5       7.3        5.5
Mexico                       3.2    1.8    0.3    4.0       4.9        4.2


Caribbean**                  5.6    3.7    2.9    7.8       6.7        7.9
The Bahamas**                2.8    1.0    1.2    2.5       4.5        3.5
Barbados**                   3.3    1.7    1.0    4         9          6.4
Jamaica**                    1.2    0.7    0.9    9.3       20.2       15.4
Trinidad & Tobago**          5.5    5.0    4.5    7.9       10.1       10


Japan                        2.1    0.5    -0.2   -0.8      -0.6       -0.3
China                        13.0   9.0    6.7    4.8       6.4        4.3
India                        9.3    7.3    5.1    6.4       7.9        6.7
Source: IMF World Economic Outlook Update ( November, January 2009),
*Source: CPB Macroeconomic Outlook September 2008
**Source: IMF World Economic Outlook (October 2008),



                                                                         21
1.1.2 Global Inflation
Inflation has been on the rise for a large part of past year. According to
the IMF different factors have played mutually reinforcing roles in the
commodity price boom on top of the typical supply and demand factors.
Financial conditions, such as low interest rates and the depreciation of
the dollar have been some of the factors contributing to this inflation.
Food and oil price increases have been other important factors. On the
demand side for food there has been an increase due to increasing
incomes in emerging market economies. In addition, increased demand
for food as input for often-subsided bio-fuels has added additional
pressure on food prices. On the supply side weather conditions have
negatively affected several harvests. All in all food prices have been on
the rise globally, moderating only recently, but still remaining at higher
levels than before. This price increase of food has been of particular
concern in low-income countries, where food forms a large part of total
consumption. Oil prices have recently declined by over 60 percent since
their peak, in light of slowing global demand, a strengthening of the US
dollar, and the financial crisis. But they still remain at levels higher in
real terms than at any time in the past 20-years, and remain difficult to
predict due to their volatile nature.


In the context of stabilizing growth and a slight stabilization of
commodity prices, inflation rates around the world are expected to
moderate. In emerging and developing countries inflation remains at 9.2
percent in 2008 as not all the commodity-price increases have been fed
trough. Once these are fed trough the inflation rate is expected to fall
down to 5.8 percent in 2009 (see Table 1). In the advanced economies
inflation is expected to fall back to 0.3 percent by the end of 2009, after
having risen to 3.5 percent in 2008 (see Table 1).

22
1.1.3 Global Financial Markets
Financial markets have been under great stress since the problems in
the US subprime mortgage market were unveiled in the month of
August of 2007. As the Bank for International Settlements observes in
its latest annual report: “The duration of the turmoil, its scope and the
growing evidence of effects on the real economy have come as a great
surprise to most commentators, private as well as public.” At the root of
the unraveling of the subprime mortgage market is the housing market
bubble in the US, which burst in August of 2007. According to the IMF
easy monetary policy at the beginning of the current decade seems to
have contributed to the run up of housing prices and residential
investment in the U.S, although its effect was probably amplified by the
loosening of lending standards and excessive risk taking by lenders.
The developments in the housing market and consequently in the
mortgage    market     has   caused     major   financial   difficulties   for
undercapitalized banks and mortgage lenders. As mentioned in the
Global Financial Stability Report of the IMF (January, 2009) market
confidence has deteriorate due to gradually narrowing of funding. In
addition the many credit markets remain at their peak. The financial
system has been severely weakened by increasing losses on assets,
uncertainty regarding the availability and cost of funding, and further
deterioration of loan portfolios as global economic growth slows.
Additionally, the interbank market with its liquidity providing function has
also dried up as confidence in counterparties is low. The cleaning up of
the balance-sheets of these financial institutions and restoring
confidence and liquidity in the global financial markets is likely to slow
down economic recovery. In the longer run however these efforts are
expected to reap their full benefits.


                                                                           23
1.2 COUNTRY AND REGIONAL PERSPECTIVES


1.2.1 The US
The economy of the US is slowing as the financial turmoil has become
apparent in its financial markets and has spilled over into the real sector
of the economy. Since the summer of 2007, residential investment has
been declining and inventories have been compressed. Consumption
has decreased significantly as households face deteriorating balance
sheets and tight bank lending conditions limits the availability of credit.
US firms however, have remained relatively healthy despite the slowing
economy and tighter credit conditions and exports have continued to
boom. Business and consumer confidence however, have started to
diminish. Consequently, economic activity in the US declined in the final
quarter of 2008 and the first quarter of 2009 with respectively -1.1 and -
0.5 percent compared the same quarter of the previous year. On a
year-in year basis growth declined from 2.0 percent in 2007 to 11.1
percent in 2008 to -1.6 percent in 2009 (see table 1) The economy is
only expected to return to potential growth in 2010. The majority of risks
surrounding this outlook are on the downside, as the credit-crunch may
impose larger constraints on activity, housing price corrections may
extend into 2010. The risk of deflation are rising and may play a larger
risk for the outlook. In addition, the sharp increase in the issuance of
public debt could have an adverse market reaction, unless government
clarify their strategy to ensure long-term sustainability. Upside risks are
that financial conditions could improve faster than expected due to
stronger policy actions. This could boost consumer and business
confidence and ease the credit crunch. By this means the US economy
mind start recovering.



24
1.2.2 Western Europe
While initially seeming to have escaped from the financial turmoil that
originated in the US subprime mortgage market in 2007, the euro area
and the UK have been undergoing major financial turmoil that has been
weighing down economic activity. Confidence in the financial sector has
fallen and many financial institutions have been forced to deleverage
and recapitalize, a process that could take considerable time to
complete. As a result, credit will be harder to obtain.


As housing values fall, mainly in the UK, Finland, Greece, Ireland and
Spain, the debt burden for many households is likely to increase and
slow down consumption. However, households are likely to be less
vulnerable to a drop in housing values compared to US consumers as
savings tend to generally be higher and debt lower, sub-prime
mortgages less wide-spread, loan-value ratios much lower, and
opportunities for equity withdrawal much more limited.
Inflation levels have at the same time remained at high levels despite
falling somewhat following a drop in oil prices, but the response of
wages has not been large, as inflation expectations have remained
well-anchored.


Furthermore, exports are expected to slow in the euro area in line with
world demand and is expected to deteriorate further on. In this context
economic growth in the euro area moderate from 2.7 percent in 2007, to
1.0 percent in 2008 and is expected to fall to -1.6 percent growth in
2009. In the UK real GDP growth felt from 3.0 percent in 2007 to 0.7
percent in 2008 and is projected to decrease further on to -2.8 percent
in 2009. Again, most of the risk surrounding these projections are on

                                                                    25
the downside. These include accelerated deleveraging in the financial
sector set off by a broader credit crunch and broader asset price
deflation, an sudden unwinding of global imbalances, and a sharp
appreciation of the euro. The upside risk, although small, relates to still-
strong employment that may possibly reinforce consumption more than
expected. The volatility in energy prices pose either an upside or a
downside risk.

                               2
1.2.3 The Netherlands
Due to its relatively open character compared to other European
countries, the Dutch economy is very susceptible to global economic
developments. In 2007 the Dutch economy remained strong as the
economy grew 1 percent each quarter,                       as spill-over’s from the
mortgage crisis in the US had not yet spilled over to European markets.
This quarterly growth resulted in an overall economic growth of 3.5
percent in 2007. In 2008 however, economic growth in the Netherlands
was less than 2007 reaching a 2.3 percent (see Table 1) real growth.
The main cause of the slow-down is the slowing economic activity in the
export sector. In turn, this is to a large part due to the slowing demand
from the global economy. Economic growth for 2009 is projected to be a
                                              3
mere slow down to -0.75 percent . This further slow-down can be
explained by a lower growth of domestic spending, particularly
investment spending.




2
    The source used for this section is the Newsletter of June 2008 and the Macro
Economic Outlook 2009, both published by the Central Bureau of Planning of the
Netherlands, June 2008
3
    CPB Newsletter, December 2008
26
Despite the slow-down in economic activity tension on the labor market
remains. In addition, inflation, resulting in part from strong commodity
price increases, was 2.5 percent in 2008 is expected to be around 1.5
percent in 2009, compared to 1.6 percent in 2007. Taken together,
tension on the labor market and inflationary pressure are projected to
lead to an increase in wages of 3.75 percent in 2009.


Household consumption is expected to fall to 0.0 percent in 2009 (the
lowest growth rate of consumption since 2003), down from 2.1 percent
in 2007. Investment is expected to decline with 6.0 percent in 2008. The
export is projected to decrease with 2.3 percent in 2009. The
weakening of world trade largely contributes to this slowdown together
with a fast growth in wages and the relatively expensive Euro.


The risks of the outlook for the Dutch economy are mostly on the
downside. The largest of these risks appears to be the international
financial crisis that could turn out to have more and more prolonged
negative effects for the Dutch economy. The volatility in commodity
prices also remains a risk, as they could turn out more negative or more
positive than expected. Another risk is the risk related to the value of
the euro in relation to the dollar which could turn out to be higher or
lower than the 1.26 dollar/euro used to create projections.


1.2.4 Latin America and the Caribbean
The IMF predicts a slow-down in Latin America and the Caribbean.
Latin America has increasingly been affected lately by the international
financial turmoil with equity prices falling, spreads widening, access to
external financing dwindling, and exchange rates coming under
pressure. The fall of the commodity prices since mid-2008 have been

                                                                      27
undermining demand and the terms of trade in commodity-exporting
countries in Latin America as commodities make up a large part of total
exports and are an important source for government revenues.


According to the ECLAC the economies of the Caribbean and Central
America are expected to be hit the hardest by the global economic and
financial crisis due to their dependence on demand from tourism which
is generally income-elastic. Export of tourism related services is
estimated to        make up about 20 percent of the economies of the
                                                                        4
Caribbean compared to 5 percent for Central America .                        Expected
remittances are also expected to fall as the job market in developed
countries weakens. The low-income classes in the Central American
and Caribbean region are particularly dependent on these remittances.
In Haiti, Honduras, Jamaica, El Salvador, Nicaragua and Guatemala
these remittances make up between 15 percent and just under 40
percent of GDP.


Inflation in the region has reached 5.4 percent, the highest inflation rate
in five years. Inflation has hit double-digit levels in a number of
countries, including the Republica Boliviariana de Venezuela, Bolivia
and Paraguay. While in most countries inflation has not fed into nominal
wage growth, this is not the case in Republica Boliviariana de
Venezuela and Argentina. Within this economic environment, economic
activity in Latin America and the Caribbean has reduced from 5.6
percent in 2007 to 4.6 percent in 2008 and is estimated to be 1.1
percent in 2009 (See table1). Current accounts are expected to move to
deficits, after being in surplus since 2003, but the deficit is expected to


4
    Preliminary Overview of the Economies of Latin America and the Caribbean, 2008
28
remain quite low. Reserve levels are high, and flexible exchange rates
allow room for adjustment in a number of countries. The risks to the
outlook for Latin America and the Caribbean are largely related to
external developments. A deeper downturn could activate a sharp drop
in commodity prices, while at the same time external financing condition
could continue to tighten as global financial markets and institution
remain under stress.

                                                           5
1.2.5 Emerging and developing economies
The economic expansion in emerging and developing markets is losing
                                                       6
steam. Economic growth in emerging Asia was 7.8 percent in 2008 and
is expected to shrink to 5.5 percent growth in 2009. In China growth is
projected to decrease from to 9.0 percent in 2008 to 6.7 percent in
2009. In India economic growth is projected to slow from 7.3 percent in
2008 to 5.1percent in 2009. It is still expected however that China will
soon overtake the US as largest manufacturer: Next year China will
account for 17 per cent of manufacturing value-added output of $11,783
                                                                                        th
billion and the US will make 16 percent (Financial Times, August 10 ).
The risks to this outlook are firmly to the downside as a build-up of
stress in the global financial system and a sharper than anticipated
global slow-down could further weigh on activity and could further
negatively affect exports and economic activity. A risk to the upside may
be that domestic demand may turn out to be stronger than expected,
with falling commodity prices improving real incomes and purchasing
power.



5
    Source: IMF World Economic Outlook October 2008
6
    India, Pakistan, Bangladesh, Indonesia, Thailand, Philippines, Malaysia, Vietnam,
Korea, Taiwan Province of China, Hong Kong SAR, Singapore.

                                                                                        29
Inflation in China has steadily declined since its 8.5 percent peak in
April, as food prices have decreased. Core inflation, which is an
indicator of second-round effects, has been rising modestly but remains
contained. The outlook for inflation in China is 4.3 percent in 2009. In
India, however, ground has been created for second-round effects as
there has been high resource utilization, robust credit growth, and
insufficient policy tightening. Inflation in India is projected to be 6.7
percent in 2009.



1.3 GLOBAL EFFECTS ON THE ARUBAN ECONOMY
A small and open island economy can be vulnerable to external
economic developments. Hence, international economic developments,
such as the current financial crisis in the US and the world and the
volatility in commodity prices are unquestionably relevant for the small
open island economy of Aruba. According to the foreign trade statistics
set up by the Central Bureau for Statistics, the US is the country with
the highest percentage of the total import trade value in Aruba in the
period 2000 until 2007 with more than 55 percent, followed by the
Netherlands between 13-15 percent. The Aruban financial system is
however, as opposed to the real sector of the economy, relatively
                                                              7
closed. According to the Central Bank of Aruba , banks and insurers in
Aruba only have a small part of their assets abroad. Commercial banks
mainly lend to residents and thus have little foreign exchange exposure
originating from their loan activities. Additionally, strict rules and
regulations regarding the holding of foreign investments have insulated
to a large extent the supervised financial institutions from the ongoing



7
    Press Release, October 9th, 2008 “The global nancial crisis and the Aruban Economy”
30
crisis. From this perspective, the Aruban economy is largely shielded
from developments in global financial markets and institutions.


We may however witness a drop in foreign investments as a credit
crunch in international financial markets makes it more difficult to
finance projects in Aruba. As foreign investment is an important booster
of economic activity in Aruba, the international financial crisis may via
this channel negatively affect our GDP growth rate. Moreover, because
exports are the main driver of the Aruban economy, whatever affects
the consumers abroad can affect our economy. Since the US is our
major market (the US market generates about 71 percent of the total
number of tourism arrivals), anything that happens there is likely to
affect the Aruban economy. The exact transmission mechanism
remains somewhat unclear given the complexity of the financial crisis,
but a downturn in our major export markets is likely to affect the leading
tourism indicators negatively. How much and in which way it will affect
the economy also depends on the reactive steps, or rather, proactive
steps taken by the tourism industry and authorities.


Inflation is another factor that is largely determined by external
development, because of the open nature of the Aruban economy, with
the majority of imports coming from the United States and the
Netherlands. In turn our import price influences our export price as the
export sector consumes a lot of imported goods and services. Foreign
inflation thus not only influences our import price and CPI, but also our
export price.
In addition, oil price fluctuations are likely to have a significant impact
on the inflation rate in Aruba. Prices of products with a high weight
depend heavily on the oil price. In addition, this will increase the costs

                                                                        31
of production in Aruba. Oil prices also have a large effect on the cost of
air travel, which is the main way tourists arrive on the island apart from
cruise arrivals. However, when oil prices are hedged by the airlines, as
was done previously, a drop or increase of the oil price may not directly
lower or increase prices of airline tickets.


Given the peg of the Aruban Florin to the US dollar and the Netherlands
being an important source of imports, the external value of the dollar is
another factor that has repercussion for the Aruban economy. A fall in
the exchange rate of the dollar against the Euro for example is likely to
change the composition of our exports by attracting more visitors from
the euro area. A pre-condition for an increase in visitors from any
destination however, is that there is sufficient airlift available to cater an
increase in demand. The ministry of tourism, the ATA, and the tourism
industry play an important role in stimulating this airlift supply.




32
2. TOURISM


In the first section of this chapter an overview of the most important
indicators of the performance of the Aruban tourism sector is presented.
The data come from the ATA and the Tourism Profile 2007, published
by CBS.


2.1 ARUBA TOURISM REVIEW 2007


The tourism sector is of considerable importance in Aruba as its role in
the economic development of Aruba has become particularly significant
through its potential to create jobs,    increase government revenues,
stimulate private investment and earn foreign exchange.


2.1.1 Stay-over visitors and nights
As can be seen in figure 2.1, the tourism sector experienced a growth of
11.0 percent in the number of stay-over arrivals in the year 2007. This
growth represents a recovery from the drop in 2006, when stay-over
visitors decreased by 5.2 percent compared to 2005. Visitor nights also
recuperated from the drop in 2006: the total number of visitor nights in
2007 was 5.879,888, which is an increase of 7.5 percent increase
compared to 2006. This is in essence a recovery from the drop in visitor
nights and stay-over visitors in 2006.




                                                                     33
Figure 2.1 Growth in stay-over visitors and visitor nights
   15

     10

      5                                               Stayover visitors,
                                                      % change
                                                      Number of visitor
      0                                               nights, % change
       2003   2004      2005      2006     2007
     -5

  -10

Source: Tourist Profile 2007, CBS, ATA.


2.1.2 Tourism performance indicators
Important indicators of the performance of the tourism sector are the
occupancy rate, the ADR (average daily rate) and the RevPAR
(revenue per available room). These indicators can be used as proxies
for the performance of the total tourism accommodation, but also can
be used to proxy the performance of subsection such as hotel and time-
share. With reference to figure 2.2 the growth in the stay-over arrivals
has led to a total occupancy rate of 77.8 percent in 2007, which is a 1.3
percent increase compared to the year 2006. Consequently this growth
has led to a total average daily rate of US$ 118.36 which is 2.5 percent
more than in 2006. In line with this growth of the ADR, the revenue per
available room (revPAR) also increased as can also be seen in figure
2.2. The total revPAR increased by 4.1 percent. When considering the
hotel sector as separate from the time-share it is clear that much of the
growth in occupancy rate and average daily rate in 2007 can be
attributed to the growth in the time-share sector. Time share occupancy
increased by 3.5 percent while hotel occupancy slightly increased by
34
0.3 percent. Similarly, the ADR of time-shares increased by 25 percent
while the ADR of the hotel sector dropped by 0.5 percent.



Figure 2.2 Tourism performance indicators

   25
   20
   15
   10
                                                       ADR, % change
    5
    0
    -5   2003   2004   2005   2006   2007
  -10
  -15

Source: Tourist Profile 2007, CBS


2.1.3 Origin of visitors
With respect to the origin of the visitors to Aruba, the US and Venezuela
stand out, with the US having a 67.9 percent markets share and
Venezuela having a 12.1 percent market share in 2007 . This is
consistent with the observation that together, Venezuela and the US
have made up approximately 80 percent of the total market since the
year 2000.The recovery of 11.2 of the number of stay-over visitors has
mainly taken place in US, Canadian, Venezuelan, and Colombian
markets. In the year 2007 the US market increased by 3.1 percent while
the Venezuelan market increased by a more than 60.0 percent
compared to 2006. The Venezuelan market however, tends to fluctuate
more than the more stable US market. At the same time the number of


                                                                       35
Colombian stay-over visitors increased by 13.6 percent, while the
number of Canadian stay-over visitors increased by 11.8 percent.


2.1.4 Average length of stay and tourism expenditures
The annual average length of stay as shown in figure 2.3 increased
from 7.8 days to 8 days by 2.2 percent in 2007 compared to 2006. This
can be seen as a recovery of the drop in average length of stay in 2006.
The average daily expenditure in 2007, however, dropped by 11.2
percent after a drop of 7.9 percent in 2006 (see figure 2.3).


Figure 2.3 Average daily expenditure and average length of stay


 140                                     8,0
 120                                     7,9
 100                                     7,8
                                                   Average daily
     80                                  7,7       expenditure (CBS)
                                                   (Stayover and
     60                                  7,6       cruise)
     40                                  7,5       Average length of
     20                                  7,4       stay, days

      0                                  7,3



          2003 2004 2005 2006 2007

Source: Tourist Profile 2007, CBS


As can be seen in the graph below there is a difference between the
tourism revenues as measured by the Central Bank of Aruba and the
CBS. This difference has been mainly due the increase in price of pre-

36
paid packages over the past couple of years. One part of the pre-paid
package is a source of income for Aruba, while another part of it goes to
                                      8
airlines and services abroad . Measuring how much revenue goes to
Aruba versus abroad through the CBS survey has proven extremely
difficult. The Central Bank of Aruba on the other hand, measures
tourism revenues through credit card transaction to Aruban bank
accounts. The CBS survey has thus tended to underestimate the
tourism revenues due to the increase in the value of pre-paid packages.


Figure 2.4 Tourism revenues
     2500

     2000

     1500                                                         CBS
     1000                                                         CBA
                                                                  CBA-CBS
       500

         0
              2002 2003 2004 2005 2006 2007

Source: Tourist Profile 2007, CBS; CBA




8
    According to the definition used by the CBS ‘A package tour comprises a number of
tourist products which are purchased by the visitor as a single entity. There is one single
charge for the whole package, which is usually cheaper than the aggregated cost of the
items if purchased separately by the visitor. It is identified as a separate item because
visitors who are supplying their expenditure breakdown cannot reliably break down their
package expenditure into its component parts.’

                                                                                            37
2.1.5 Cruise tourism
As illustrated in figure 2.5 the number of cruise tourists visiting Aruba
dropped in the year 2007. In 2007 there were 481,775 tourists while in
2006 there were 591.474. This represents a drop of 18.5 percent. This
was largely due to the fact that the cruise ship Carnival destiny made its
last visit to Aruba early 2007. At the same time however the drop was
partially compensated by the decision of Pullmantur to use Aruba as a
home port for its cruise ship “Blue Moon” with its capacity of 800
passengers. As usual, the typical seasonal fluctuations in number of
cruise passenger were witnessed in 2007 with the first and last quarter
of the year showing the most cruise passenger arrivals.


Figure 2.5 Cruise passengers

     800
     600
     400                                  Cruise Passengers,
     200                                  thousands

       0
           2003 2004 2005 2006 2007

Source: Tourist Profile 2007, CBS


Meanwhile, cruise calls increased slightly in 2007 despite the decrease
in amount of cruise passengers, because of a decrease in the capacity
of the ships (as indicated by the average number of passengers per
ship). See figure     2.6   for a graphic representation. Furthermore,
average daily cruise tourism expenditure has been estimated by DEACI
to be Afl. 225 in 2008. The number of cruise visitors increased by


38
approximately 15 percent reaching a total number of 556.090 visitors for
2008.
Figure 2.6 Cruise calls and cruise ship capacity
 1900                                              320
 1850                                              318
 1800                                              316
                                                   314       Average
 1750
                                                   312       no. of
 1700                                              310       passeng
 1650                                              308       ers per…
 1600                                              306
           2003       2004   2005   2006   2007

Source: Tourist Profile 2007, CBS


2.1.6 Other
A concern in the tourism sector for the future is the introduction of a
new immigration law that limits the period that a foreign worker can live
and work in Aruba for 3 years. This law does not apply to people of
Dutch nationality. Given the reliance of the tourism sector on foreign
(non-Dutch) labor, this new law is likely to have consequences for the
sector. More in particular, concerns have been voiced about the
consequences for the quality of the labor force and the extra costs to
the employers that the increased need for training brings along.
Another concern is a proposed labor law that will limit the normal and
over-time working hours, increasing costs and possibly compromising
quality of service.




                                                                        39
2.2 TOURISM IN THE CARIBBEAN


2.2.1 Global Tourism
Tourism developments in Aruba should be seen in light of international
developments. International tourism demand has cooled significantly in
the period of May-August of 2008 according to the UNWTO Tourism
Barometer. After a strong start of the year 2008, after the month of May
the situation started to turn around, with in June, July and August
growth being below 2 percent, compared to a still-strong growth of 8
percent in the month of May. This down-turn reflects the rising oil prices
at the beginning of the year, economic deterioration of the situation as
well as a drop in consumer confidence. The slow-down has been most
pronounced in Asia and the Pacific. There was a stagnation in the
Americas, Africa and the Middle East as well, but this was less
pronounced. Europe has also seen its tourism industry stagnate since
the summer months. Moreover, this slow-down is expected to continue
into 2009. The UNWTO expects that travel to destinations closer to
home are going to be favored compared to long-haul travel. Also,
several segments are expected to be more resilient than others: visiting
friends and family, repeat visitors, special interest and independent
travelers. Destinations with a perception of good value for money and
                                                9
having a favorable exchange rate are also expected to be remainred


9
    Exchange rates have a relatively small effect on total international visitor arrivals.
However, fluctuating exchange rates do affect how much visitors spend while they are
here. Destinations with currencies against which a source market’s currency depreciates
become comparatively more expensive, while in case of appreciations of the source
market’s currency, they will become more expensive. So a weak dollar will benefit the
USA as a destination but make destinations with stronger currencies less attractive for
tourists with US dollars in their pockets.

40
stronger. Furthermore, it is expected that the tourism industry will likely
focus on keeping costs down as much as possible.


Within the tourism industry air travel is expected to be hit harder than
other segments of the tourism industry. While oil prices may have fallen
recently in light of the economic downturn, a stronger dollar means
higher oil prices for non-US airlines. Oil prices are therefore likely to
remain high. Additionally, many airlines have been locked in by hedging
at high oil priced while oil prices have fallen. This burden on airlines
also poses challenges for the destinations themselves, as airlines, in an
effort to stay afloat, may cut frequencies and certain routes to reduce
capacity. Long-haul travel is expected to suffer the most as people tend
to choose closer destination in times of turmoil.


2.2.2 Caribbean
Arrivals in the Caribbean have been higher than in 2007, but the main
increase has been in the first three months of the year (in line with
                                                        10
global developments). According to ECLAC                     the Caribbean countries
recorded growth of just 3%, with flat growth between June and August,
owing to a decline in arrivals in the Bahamas, Barbados, Bermuda and
Puerto Rico, four destinations which receive visitors mostly from the
United States and Europe.


After this the general trend is downward as US tourists are suffering an
economic downturn back home. The US is living in an environment of
high gas prices, higher airfare, scarcity of credit, poor performance of
the stock markets and a housing market collapse, people are worried
about their jobs, their retirement funds, their mortgages, their debts, the

10
     Preliminary Overview of the Economies of Latin America and the Caribbean, 2008
                                                                                      41
value of their stocks and the value of the dollar. The Caribbean may
however suffer less than other destination form the downturn in the US
economy, according to the UNWTO because it is closer to home, more
familiar and often less expensive for US citizens. Travel to Europe was
down by 4 percent in the first 7 months of 2008, while there were
growth rates of 3-5 percent of US tourists travelling to the Caribbean,
Central and South America. This may indicate a shift of long-haul travel
to short-haul in favor of these regions. This does not mean however that
the Caribbean is safe from the economic storm. According to Business
Monitor International Tourist arrival figures for the Dominican Republic
will start to slow sharply, having already dropped 11.4 percent year on
year in the month of September. The medium-term outlook for the
tourist industry is also bleak, as Barbados’s main sources of tourist
revenue, the UK and US, are likely to dry up. The persistence of global
risk aversion means the industry could suffer from severe under-
investment, highlighted by the 7.1 percent drop in lending to tourism-
related borrowers,    which could hamper       growth beyond      2009.
Furthermore, Business Monitor International is also concerned about
the negative impact of damaged infrastructure on tourism in Antigua
and Barbuda, which may already be in for a tougher time next year with
slower global growth (particular in the US), financial sector turmoil in
international markets, and heightened crime perceptions. Jamaica’s, the
Cayman Islands and Guyana’s tourism sector are also threatened.


2.2.3 Industry and policy response in the Caribbean
Many destinations in the Caribbean are focusing on increasing visibility
and exposure in these turbulent times to limit the damage to their




42
                         11
tourism industries.           New marketing strategies are being tried to make
sure their destination stays top-of-mind for travelers planning their next
vacation. Some destinations are convinced that price is a crucial factor
in attracting tourists and are making efforts to lower the price to
potential travelers. Strengthening relations with travel agent partners
also tends to be part of efforts to limit the damage to tourism industries
around the Caribbean. Private and public tourism entities are tending to
work closer together to limit damage. In November President & CEO of
the World Travel & Tourism Council (WTTC) called on governments
around the world to work in partnership with the private sector of Travel
& Tourism for the long-term sustainability of the industry.


2.2.4 Industry and policy response in Aruba
Private and public authorities are working closely together in Aruba, as
ATA and AHATA have developed a contingency plan in response to the
economic down-turn and financial crisis that are threatening the Aruban
Tourism industry. The Aruban government is investing $10 million in
this plan. The plan is based on a set of strategies, which are the
following:
       1. Continue to create demand from the current markets, that have
            air service and where Aruba as a destination has good name
            awareness.
       2. Seek to maintain current air service by creating demand in
            Aruba’s primary and feeder markets. This in order to assist the
            airlines in filling its seats
       3. Invest in markets to ensure success of new airlines and flights
            and additional frequency of flights. COPA is a new airline that

11
     “Caribbean adjusting forecasts, strategies for winter season” (Travel Weekly, November
2008)

                                                                                       43
         started servicing Aruba from Panama and JetBlue has
         announced expansions from Boston and New York
     4. Increase investments in markets with planned or potential
         market service. Charter services from Italy have started in early
         November and there are charters from Scandinavia starting at
         the end of 2009. Charters from the UK may also increase, In
         order for these charters to be successful Aruba will continue
         increase its support in these markets.
     5. Motivate repeat visitors to return in 2009.
     6. Not selling Aruba too cheap. ATA and AHATA believe Aruba is
         a product of high quality.
     7. Right timing for marketing campaigns
     8. Investing more money to ensure top of mind, awareness, and
         share of voice
     9. Focus strategies on consumers that still have the potential to
         travel and focusing on the high-season when most revenue is
         generated in Aruba
     10. Continuous monitoring of the situation and remaining flexible to
         change strategies


The overriding idea is that short-term planning should not jeopardize
long term necessity for market stability.


2.2.5 Climate Change
International concern about climate change is increasing worldwide.
Climate change is a major issue for the long term sustainability of
tourism in two senses: climate change will have consequences for
tourism and tourism is itself a contributor to climate change. There is
now widespread scientific consensus that global warming is a reality

44
and it’s a man-made phenomenon. The principal greenhouse gas is
carbon dioxide (CO2), generated by the combustion of fossil fuels, the
changes in temperatures and other important features of climate will
                                                                         12
manifest themselves differently across the regions of the world .


The effect of changes in temperature and rainfall on market appeal of
the Caribbean will depend on the interplay of push and pull effects in
countries of origin and destination. Some of the effects of climate
change are already apparent. The tourism industry and destinations are
clearly sensitive to climate variability and changes. Climate defines the
length and quality of tourism seasons and plays a major role in
destination choice and tourist spending. In many destinations, tourism is
closely linked with the natural environment. Climate affects a wide
range of the environmental resources that can deter tourists, including
water-borne pests (e.g. jellyfish) and extreme hurricanes. Climate
change might start to affect visitor arrivals to Aruba if people start flying
less as a result of other destinations having warmer summers. Aruba’s
response to these concerns will be fundamental to the future success of
the tourism sector.


2.2.6 New Tourism Trends
A number of global tourism trends have been identified in the Country
                        13
Brand Index 2008 :
       1. Women are traveling more frequently without men. The number
            of women-only travel companies has jumped 230 percent in the
            last six years, while women-only travel sites have proliferated.


12
     Climate Change and Tourism, Responding to the Global Challenges, UNWTO
13
     Country Brand Index 2008: Insights, findings and country rankings

                                                                              45
         Over half of all adventure travelers worldwide are women, and
         their average age is 45.8.
     2. Grandchildren      are   accompanying        their   grandparents     on
         vacation. Rich retirees in the US, Canada and Japan are
         traveling more, and this trend by itself is likely to continue
         increasing. At the same time, up to half of vacationing baby
         boomers now travel with their grandchildren, indicating a new
        segment of multigenerational travel.
     3. Spontaneous travel has become more increasingly common as
         high-pressure lifestyles and developments in online travel have
         resulted in consumers taking more short trips each year. These
         trips are often booked with little advance notice. In fact, specific
         online sites have sprouted up catering to this growing “last-
         minute, few-days” traveler.
     4. Religious traveling is another segment on the rise. The Vatican,
         for example, has launched the world’s first airline for Catholic
         pilgrims. Additionally, specialized tours cater to orthodox
         believers from several religions, ensuring that activities meet
         sometimes stringent religious standards.
     5. There is a rise in people visiting attractions — places and/or
         species — that are seen as endangered or at some form of
         time-related environmental risk. From polar bear and harp seal
         excursions to rain forest and glacier vacations, many travelers
        are prioritizing these types of trips so they can experience the
         attraction in their lifetimes, before it is lost or irrevocably altered.
     6. Citizens in destination countries are now becoming more critical
         about the brands their countries present. Much has been made
         about Botswana’s recent country branding efforts, that focus on
         opportunity and tranquility, which Botswana citizens feel does

46
   not capture the country’s spirit or create excitement. Italy’s
   design community also rejected a new Italy country logo. The
   logo was subsequently dropped by the government.
7. In their quest for an authentic experience, travelers have
   recently been seeking out destinations such as Soweto, South
   Africa; Mumbai, India; and Rio de Janeiro, Brazil for
   experiences that expose them to poverty stricken communities
   or polluted areas. “Poorists” look for experiences that appeal to
   their empathy for the disadvantaged and give them exposure to
   a reality that is not available in expensive trips to exotic
   destinations.




                                                                 47
3. SECTORAL DEVELOPMENTS IN ARUBA


This chapter provides an overview of developments in the most
important sectors of the Aruban Economy in the year 2007 and the start
of 2008 and indications of future developments in these sectors.


The partial economic activity index (PEAI) illustrates the trend in
production volumes of seven industries. These seven industries
together contribute 71.3 percent to the GDP of Aruba. With this
measure an indication can be given as to the developments of the
seven main industries of Aruba and of the GDP in a certain year.


Below the industries of the PEAI can be seen graphically whereby it is
evident that the four main industries influencing our economy are: other
business and non-business services, trade, housing and hotels and
restaurants (figure 3.1).




48
Figure 3.1 Share of the seven industries of the PEAI




                              6%                        Argriculture and manufacturing
             16%                      4%                incl oil refining
                                                        Utilities

                                             9%
                                                        Construction

                                                        Trade


 13%                                                    Hotels and restaurant

                                                  14%   Transport, storage and
                                                        communications
                                                        Financial intermediary

                                                        Housing

       13%
                                                        Public administration and
                                           10%          education
                                                        Other business and non-
                   7%         8%                        business services



Source: Central Bureau of Statistics Aruba


In 2007 the PEAI dropped with 0.6 percent compared to 2006. This
drop was caused by a drop in economic activity in the public
administration and construction industry. Lower personnel costs in the
public sector together with the high inflation rate were the main factors
for the decrease of 11.6 percent in the public industry, while the
construction industry shrank with 10.0 percent. This trend can also be
seen in 2008. The statistics of CBS show during the first half of 2008, a
drop of 1.7 percent in the PEAI compared to the same period of the
previous year. As will be presented in the economic forecast for 2008,
the main driver will be the performance in hotel and restaurant given the
                                                                            49
strong growth in the number of visitor on the island in the first half of
2008.


In table 3.1 and in the following sections volume developments of the
industries will be briefly described for 2007 together with a general
indication for 2008 and 2009.


Table 3.1 Volume developments of the industries in percentage
Industries                           2006    2007         1Q         2Q
                                                        2008       2008
Utilities                              0.0     2.6       -2.1       -3.5
Construction                          -2.7   -10.0       -5.7       -8.7
Trade                                 -3.9     8.6       -6.8      -15.9
Hotels and restaurants                -2.5     5.6       10.2        7.2
Transport,     storage    and         -0.6    -0.6       17.7        6.4
communications
Housing                                3.3     2.7        2.2        2.4
Public    administration  and         -2.9   -11.6      -14.4       12.9
education
PEAI                                  -1.3    -0.6        0.2        -3.6
Source: Central Bureau of Statistics Aruba




3.1 AGRICULTURE, M ANUFACTURING INCL. OIL REFINING


The sector agriculture, livestock production and fishery constitute a
small economic segment for the Aruba economy. Estimations are that
the contribution to the GDP is marginal. The main characteristics of the
sector are the small domestic market, the production aimed totally at
local consumption. The sector is subsidized by the government through
the department of agriculture, livestock & fishery which guarantees the
production of some agriculture products by affiliated farmers.

50
The number of persons employed in the sector of agriculture, hunting,
forestry and fishery is estimated to be around 250. The total
establishments in this sector is likely to be approximately 40 companies.
The trend is that the activities in agriculture, hunting and forestry have
been growing since the last year while the fishery has shown a decline.
As for manufacturing including oil, the refinery counts for approximately
13 percent of Aruba’s gross domestic product. It directly employs 695
people, and accounts, directly and indirectly, for 12 percent of Aruba’s
employment. According to the statistics of the Central Bank of Aruba
(CBA), the quantity of oil refined in 2007 increased with 6.6 percent to a
level of 65,525 million. Barrels. The value of export of refined oil has
increased with 4.9 percent in 2007 compared with 2006, while the value
of import of crude oil grew with 10.7 percent. Conversely, the number of
person employed by the refinery dropped with 2 percent in 2007. There
are indications that due to the international development and reduction
of international oil price that there will be less refining activities of oil in
the last months of 2008 and in the year 2009.




3.2 UTILITIES


As presented by CBS in 2007 there was a growth of 2.6 percent in the
utilities industry. With regards to production of water, the main factor in
2007 has been an increase of 2.4 percent in the consumption of water
on the island. This growth is mainly related to more connected
premises. In addition, the production by W.E.B. Aruba N.V. and Valero
increased with 2.6 percent, mainly caused by an increase in the number
of users. Due to a strong growth of 6.2 percent in the number of



                                                                             51
commercial users the total gas consumption (commercial and
household consumption) registered an increase of 3.6 percent in 2007
compared to 2006. Furthermore, the utility industry experienced an
increase in value of 6.6 percent in 2007.


In the light of the ever increasing fossil fuel prices and the strong
growth dependence on these fuel sources, W.E.B. Aruba N.V. has
initiated a long-term strategic study looking into the year 2025 and
focusing on the reduction of this dependence. They are looking
into different scenarios including least cost, sustainability and a
combination of the different alternatives. W.E.B. Aruba N.V. will be
investing approximately Afl. 62 million in 2008 and Afl. 66 million
on in 2009. Additionally, the plant will start in 2009 with
investments regarding infrastructure for the building of a windmill
park of 10 wind turbines by another company, which will have a
contribution of 20 percent to the total capacity (in WH).


In order to keep up with the growth the economy in 2007 ELMAR N.V.
had to invest in expansion and upgrading. ELMAR N.V. will invest in
2008 and 2009 approximately Afl. 19 million each year. These
investments will be in the expansion and maintenance of the
transmission and distribution networks in order to optimize the reliability
and quality of the supply of electric energy.


3.3 CONSTRUCTION


The PEAI includes the import of materials by the Valero Refinery which
can have a large, one may even say disproportionate, influence on the
development of the added value of the total sector. The added value of

52
the construction industry declined in 2007 with 10.2 percent compared
to 2006. One important indicator is the total import of cement, which
shrank with 11.6 percent in 2007. The decrease in construction
activities is primarily in the number of houses and apartments. Other
import components of construction such as ironworks, pipes, and other
construction related materials also dropped in 2007. The reason for this
decrease can be related to the international economic conditions (the
financial and housing market crisis) and the accelerated increase in the
price of crude oil, which leads to excessive project costs and delays.
Statistics of the CBS show that in 2008 the construction will decrease
further. The first half of 2008 showed a decrease of 7.2 percent.


After a few years of high growth in the construction sector, it seems that
the activities have slowed down. There are still several projects to be
executed - especially in condominium and other real estate related
projects - but there are some delays in some of the projected projects.
In 2007 the construction of the RIU Palace Hotel & Resort with 450 new
hotels rooms was completed. Marriott also completed in 2007 with the
construction of two more timeshare towers consisting of 138 new units.
In addition, there were new hotel/timeshare units built by Grape Holding
(Divi & Tamarijn).


As stated previously, condominium and real estate projects have been
slowing down in Aruba as well as in the region. The first condominium
project that was completed in 2007 was the first Oceania building. It is
expected that the showed projects in the Outlook of 2008 will be
stretched out in the coming two or three years.




                                                                       53
Table 3.2
Outline of planned condominium and shopping centers 2008 - 2012
Projects                              Units   Location         Start           Start
                                                               construction    operation
CONDOMINIUMS

Oceania Resort II                     55      Eagle Beach      2005            2007
FG Developers N.V.                    35      Eagle Beach      2008            2010
Mar Azul                              64      Oranjestad       2001            2009
Aruba Sands Development               124     Eagle Beach      2009            2011
HJC Realty (Jardines del Mar)         34      Eagle Beach      2007            2008

La Colina/Las Palmas (Tierra del      70      Palm Beach       2008            2011
Sol)
Gold Coast Villes                     267     Malmok           2006            2009
Ray Gar Properties NV(The Cliffs)     124     Palm Beach       2009            2011
Kasa Alba                             21      Morgenster       2009            2011
Caico Group (Aqua Aruba)              568     Palm Beach       2009            2012
The Residence Divi Village            54      Eagle Beach      2008            2010
The White House                       30      Washington       2009            2010
                                              Kadushi
                                              Largo,  St.
Villas Kadushi Largo                  26      Cruz             2009            2010
Wesley Developmnet (Las Islas)        20      Pam Beach        2010            2010

Modanza Green Parc                    78      Paradera         2009            2011
Modanza Villapark                     33      Paradera         2007            2011
Cunucu                    Arubiano/   23      St. Lucia, St.   2007            2011
Sta Lucia Properties NV                       Cruz
Azure Wave                            32      Eagle Beach      no indication
Bubali Condo                          8       Bubali           no indication
Ventanas Paraiso                      28      Kamay            no indication
Palm Beach Condo                      240     Palm Beach       no indication
Total                                 1935




54
Projects                            Units   Location     Start          Start
                                                         construction   operation


SHOPPING CENTERS

Palm Beach Plaza / Landy            36      Palm Beach   2007
Corporation
Morgan's Agua Park/Village Center   28      Palm Beach   2006           2009
/ Impact Holding N.V.
Dirkrom Realty N.V.                         Palm Beach   2007           2008
Goldenstrip Holdings N.V.                   Palm Beach   2008           2009
Castello de la Plaza N.V.                   Palm Beach   2008           2009
Wayaca Falls                        19      Wayaca       2008           2009
Source: Department of Economic Affairs, Commerce and Industry of
Aruba



Furthermore, The SOGA started in 2006 with the construction of three
government buildings; the Belfin building (Department of Finance and
Tax Department), the ADRS building for the accommodation for the
offices of the Prime Minister, the Minister of Tourism and Transport and
the Council of Ministers and the Infra-building that will accommodate
the department of Public Works (Dienst Openbare Werken), the
Department of Infrastructure and Planning (Directie Infrastructuur en
Planning) and the Department of Land Registry (Dienst Landmeetkunde
en Vastgoedregistratie). The government will have purchase              these
buildings with the objective to own these after 25 years. The three
buildings were completed in 2008. The total investment committed by
SOGA for the three buildings was approximately Afl.50 million.




                                                                           55
3.4 TRADE


The trade industry experienced an increase in value of 8.6 percent in
2007 compared to 2006. According to the statistics of the CBS this
growth is mostly caused by an increase in imports of pharmaceutical
goods and medical and other retail of specialized goods as shown
below in table 3.3.


Table 3.3 Key Trade Indicators
Key Trade indicators:                                             %
change
 Retail in non-specialized products,
 mainly food, beverages & tobacco as in supermarkets,
 mini-markets and toko's                                              -17,2
 Retail of pharmaceutical and medical goods                            17,0
 Retail in textiles, clothing, footwear and leather goods               2,4
 Retail in household appliances, articles and equipment               -15,5
 Retail in hardware, glass & paint                                      2,5
 Retail of books and office supplies                                  -21,1
 All other retail sale in specialized goods                            44,3


Source: Central Bureau of Statistics Aruba


On the other hand the first half of 2008 indicates that the trade industry
shrank with 4.6 percent compared with the same period in 2007. This
decrease is mainly caused by a drop in the import of mainly "Household
appliances, articles & equipment ", “Books & office supplies and "Non-
specialized goods as in supermarkets, minimarkets, etc ".




56
3.5 HOTELS AND RESTAURANTS


This sector grew in 2007 with 5.6 percent compared to 2006. This
growth was led by an increase in the number of visitor nights of 7.5
percent, reaching 5,879,888 nights in 2007. The occupancy rate in 2007
increased from 76.5 percent in 2006 to 77.8 percent. In addition, there
was also an increase in tourism revenue according to the CBA of
approximately 17 percent and a growth in the number of hotel rooms of
3.5 percent. As indicated in the Aruba Economic Outlook 2008 due to
more room capacity in 2008 the hotel and restaurant industry was
expected to grow. The RIU Hotel opened officially in October, 2007 and
450 rooms with an investment of US$120 million in upgrading and
expansion. The first half of 2008 indicates of that this industry increased
with 8.7 percent compared with the same period in 2007. However, the
projections for the second half of 2008 are set on a decrease due to the
financial crisis. By the end of 2007 Marriot Aruba Surf Club opened 138
extra timeshare units while Divi Village and Aruba Phoenix Resort have
been expanding with 245 rooms which accounts for a total investment a
total of US$50 million. In addition, Marriott Aruba Resort started in 2007
to upgrade its rooms and the lobby.




3.6 TRANSPORT, STORAGE AND COMMUNICATION


This sector showed a slight decrease of 0.6 percent in 2007 compared
to 2006. The main indicators of this sector are commercial landings,
vessels entering the port, number of visitor nights and the number of
passengers transported by the public transportation.          As can be
calculated from the table below, commercial landings, the number of

                                                                        57
vessels and content in BRT entering the port of Aruba and transported
passengers by Arubus dropped respectively with 1.2, 10.1 and 4.2
percent in 2007.



Table 3.4 Key Transport Indicators


                           2006    2006      2006   2006   2007   2007   2007   2007
                           -Q1     -Q2       -Q3    -Q4    -Q1    -Q2    -Q3    -Q4

Commercial landings
                           3.20    3.14      2.94   4.32   3.09   2.98   3.57   3.79
                           1       1         8      8      8      5      9      3

Visitor nights
                           1,41    1,29      1,39   1,38   1,50   1,33   1,51   1,55
(in million)
Port in contents (in
                           10,0    6,0       4,0    10,0   9,9    5,3    3,3    8,5
million BRT)
Port in absolute
                           447     407       415    530    498    448    436    491
numbers
Arubus                     688.    660.      654.   636.   643.   602.   626.   656.
(passengers)               928     757       244    850    800    947    136    958


Source: Central Bureau of Statistics Aruba




The cruise tourism did experience a large drop of 18.5 percent in 2007
of reaching approximately 482 thousand visitors in 2007, primarily
determined by the fact that Carnival Destiny made its last call to Aruba
per January 5, 2007. The predominant reason for this decision was the
high fuel price that made this segment not profitable for the cruise line.
The cruise tourism remains important for the island, the average daily
expenditure of a cruise visitor in Aruba is estimated by around Afl. 225
per visitor in 2008. The number of cruise visitors increased by
approximately 15 percent in 2008 reaching a total number of 556.090
visitors.

58
However in 2007 Pullmantur started using Aruba as home port for the
cruise ship “Blue Moon”, which carries 800 passengers mostl               y
European tourists. In addition, these tourists stay a few days in the
hotels of Aruba. The statistics show a recovery in 2008 due to several
new ships visiting Aruba like the Ocean Village (home porting), Aida
Cruise, Disney Magic Cruise, Island Star, Enchanted of the Seas,
Voyers of Oceania Cruises and Journey Azamara Cruises. In addition,
the Aruba Ports Authority N.V. is focusing on renovation of the cruise
terminal.


The Aruba Airport Authority NV invested in airside improvements of the
apron, runway and taxiways and into modification of the main
concession area as well as for the arrival hall. These investments will
continue through 2008 and 2009 together with investments regarding
safety and security requirements, renovation of car rental offices,
landscaping and other operational actions.



As for the industry of communication this is a sector that has been
growing on a high pace in the last years and has been contributing
successfully to the GDP of Aruba. Investments are still relatively on a
high level especially due to the demand for speed technology. A
relatively new product on the market is the digital cable with is
projected to grow even further in the coming years.




                                                                      59
3.7 HOUSING


This sector shows an increase of 2.7 percent in 2007 compared to
2006. The increase in 2007 is directly related to 835 (2.3 percent) new
premises connected to the WEB-grid reaching 36,824 connected
premises in 2007. Additionally, figures of the Central Bank of Aruba
show that in 2007, total housing mortgage lending by commercial
banks, pension funds, and life insurance companies went up by
Afl. 64.5 million (5.3 percent) from Afl. 1 ,195.2 million in 2006 to
Afl. 1,259.7 in 2007. The statistics of the first half of 2008 show a
growth of 2.3 percent in this industry . According to the PEAI of the first
half year of 2008 the housing industry shows a positive growth of 2.3
percent.



3.8 PUBLIC ADMINISTRATION AND EDUCATION


According to the figures of the CBS this sector also saw a drop of 11.6
percent in 2006. This is mainly due to a decrease in the tariffs of the
wage tax as compensation for the introduction of the BBO and the high
level of inflation. It is important to note that the output of the Public
Administration & Education sector is measured by wages and salaries.


As for the investment made by the Fondo Desaroyo Aruba, a total
amount of Afl. 22.5 million has been assigned, which corresponds with
10.8 percent more that in 2006. These investments were mainly in the
sector sustainable development, education and good governance. The
total amount assigned for 2009 is estimated to be Afl. 20 million. The
total   amount   of   investments   that   will   be   made   through   the


60
implementation of the activities pertaining to the long-term program
2006-2009 is set on a total of Afl.141 million.


The long-term program 2006-2009 is largely a continuation of the long-
term program 2001-2005. Activities in the program 2006-2009 are
divided into four different sectors, namely good governance, education,
and the social sector. The main goal of this long-term program is to
obtain sustainable development for Aruba whereby a balance is
obtained between the limited carrying capacity and the need for
economic growth. It must be guaranteed that future generations will be
able to achieve their ambitions. The activities executed in the earlier
mentioned sectors will contribute towards achieving this goal.


A total amount of Afl. 20 million will be invested in the sector good
governance. The activities in the sector good governance will focus on
the apparatus of the government whereby measures will be introduced
to strengthen the operation of the government, its management, the
implementation of policies and improvements in supervision tasks. One
of the most important activities among these is the development of the
National Integral Strategic Plan (NISP). According to stakeholders of all
four before mentioned sectors, it is a requirement that Aruba has and
executes such a plan. The plan entails amongst other items the
updating of legislation, the streamlining of the legislative process and
the issuing of instructions in this regard. In addition, a plan will be
formulated for the provision of information by the government and the
development of an integrated information system.


The main focus of the long-term program 2006-2009, taking into
consideration is sustainable economic development. A maximum

                                                                      61
budget of Afl.60 million is available for this sector. This program
consists of four main activities, namely: coastal management and the
improvement of beaches, the continuation of the implementation of the
structuring of waste water management, the completion of the second
phase of the waste management facility and the implementation of a
mobility plan according to the results of a mobility investigation.


The education sector focuses its long-term program on various activities
in order to obtain an increase in education level in Aruba. In order to
obtain a greater return, amongst other activities, an adult training
institute will be established, means will be provided for the benefit of
educational policy regarding instruction language and books and
dictionaries in Papiamento and other reference books in Papiamento. In
addition, a system will be established that will measure the quality of the
education in- and externally at the bachelor and master level including
the accreditation of the University of Aruba. This quality system needs
to be effective, efficient and integrated. Furthermore, the physical
infrastructure of the University of Aruba and the Pedagogical Institute of
Aruba will be adapted to better suit its educational purpose. A maximum
amount of Afl. 27.5 million will be available for this sector.


With the means provided by the FDA, the policy of the social sector is to
increase the development possibilities of the most vulnerable groups in
society which include, amongst others, children and adolescents, the
elderly, persons on welfare and persons with limitations/handicaps. The
vulnerable groups will be the target group because in many situations
these persons have difficulty in obtaining a higher quality of life. It is
very important in this context to prevent social exclusion and/or a
reduction in quality of life. The social sector will focus its activities

62
mainly on the target group of children, adolescents and the elderly. The
activities for this target group include, amongst other, the establishment
of an institute for remedial education and the establishment of
infrastructure for the supervision of adolescents and a care center for
the elderly in San Nicolas. The social sector has a maximum budget of
Afl. 33.5 million available for these purposes.

                     th
After September 11 2001, the Council of Ministers of the Kingdom of
the Netherlands decided to intensify mutual cooperation in the field of
counterterrorism and the improvement of law enforcement and national
security of the Kingdom. This will be obtained by the reinforcement of
legislation in this regard and the reinforcement of operational
cooperation throughout the justice system and police forces. In addition,
by the institution and maintenance of a proper intelligence infrastructure
at organizations dealing with public order and by the reinforcement of
controls and supervision within the financial sector the aforementioned
mutual goals are to be achieved.


The program for the years 2006-2007 with regard to law enforcement
and public order is an integral part of the long-term program 2006-2009
though this program has its own budget and is presently being
executed. A total amount of Afl. 10.2 million is available for the years
2006 and 2007. The activities that are being executed are, amongst
others, the reinforcement of the executive tasks of the Financial
Intelligence Unit (Meldpunt Ongebruikelijke Transacties, (MOT)). In
addition, the reinforcement of the quality of the detective force and
investments regarding the improvement of human resources of, among
others, the Prosecutor’s Office, the Customs Department and the Police
Department are also being executed.

                                                                       63
Moreover, during 2007 and 2008 the Department of Economic Affairs
coordinated the setup of a National Security Plan, that covers a long-
term vision of National Security for Aruba.
A participatory strategic planning process was employed to arrive at this
National Security Plan. The aim and intention of the participatory
planning process was to create a collectively direction for national
security with different sectors beyond law enforcement and a set of
priority focusing areas that would ultimately help to achieve the
articulated vision. This plan runs from 2008 till 2012 and is being
financed through Dutch Development Cooperation Program for an
amount of Afl. 61 million.




64
4. MACROECONOMIC DEVELOPMENTS


In the first section of this chapter we present the
macroeconomic developments that have taken place in
2007. In the second section we look at some realized
figures as compared to DEACI estimated for past years
and discuss the analysis of forecasting errors.


4.1 M ACROECONOMIC DEVELOPMENTS 2007
According to DEACI estimates the GDP in 2007 grew 1.5
percent to a nominal value of Afl. 4565 million. The source
of   this   growth   was   an   increase   in   exports   that
compensated for a decrease in investments. Exports grew
by 4.9 percent, due to an increase in the number of
available rooms, visitor nights and tourism revenues (see
chapter 2.1).


4.1.1 Government
Tax revenues in 2007 amounted to Afl. 882 million, up
from Afl. 858 million in 2006. In 2007 the turnover tax,
BBO, was introduced and increased tax revenues with Afl.
132 million. At the same time revenues from income and
wage taxes fell with Afl. 74 million, as part of a
compensation plan for the turnover tax. Government
consumption fell by Afl. 26 million to a total of Afl. 1,070
million. This decrease is mainly due to a decrease in




                                                                 65
     transfers to the general health insurance and a decrease in
     expenditure on goods and services. The decrease in
     transfers to AZV( general health insurance)       took place
     because the AZV deficit was expected to be lower than in
     previous years. The AZV, however, ended up having a
     larger   deficit   than   expected.   The   transfer   of   the
     government to cover this deficit occurred in 2008, and
     therefore shows up in the 2008 figures.                 These
     developments in government revenues and expenditures
     led to a financial deficit of Afl. 60 million on cash basis in
     2007. This is a decrease of Afl. 52 million compared to
     2006. After a worsening of the financial deficit in 2004, the
     government’s financial results have been improving over
     the years. The debt as a percentage of GDP has remained
     relatively stable around 45 percent of GDP.


     4.1.2 Inflation
     The inflation rate is mainly influenced by three external
     factors: the oil price, the euro/dollar exchange rate and
     inflation in the US. In 2007, however, there was also the
     domestic influence of the introduction of the turnover tax
     that increased the inflation rate. The period average
     inflation for 2007 was 6.0 percent according to official CBS
     figures. The effect of the turnover tax is estimated to be
     around 3.0 percent and the remaining changes in the
     domestic inflation are mainly caused by the increase in the




66
prices of water, electricity and gasoline. These are the
main products that are directly influenced by the oil price.
After the payment of house rent, the payment of domestic
fuel    and power have the highest weight in the
consumption basket that is used to compute the inflation
rate in Aruba. The overall export price is linked to the value
of goods and services in the previous year, the total of
tourism revenues of the previous year, and other values of
non-tourism exports. In 2007 the export price showed an
increase of 3.5 percent, partly due to an increase in the
cost price of exports.


4.1.3 Consumption
In 2007 the minimum wage was set at Afl. 1.460 according
to predicted inflation for 2007 and in compensation for the
implementation    of     the   turnover   tax.   This   increase
represents an increase of 7.3 percent compared to the
previous year. People earning above minimum wage were
compensated for the introduction of the turnover tax by
lower wage and income taxes. According to a household
survey conducted by the Aruba Investment Bank in June of
2007, the turnover tax remains a concern despite the
compensation for the turnover tax. Although 86 percent of
respondents claimed to still be able to cover their fixed
expenses, most of them also claimed that they could only
do so by foregoing luxury or otherwise nonessential items.




                                                                   67
     This is in line with the finding that 53 percent claim to be
     buying fewer products. Consumers also mentioned that in
     the first quarter of 2007 more attention should be paid to
     price monitoring by the government, and this concern
                          nd
     increased in the 2        quarter of 2007. Moreover, the high
     price for gas also had a great effect on the discretionary
     income of consumers.
     The minimum wage together with the lower wage and
     income tax helped sustain consumption, while increased
     revenues from exports led to an increase of private
     consumption. Consumer credit rose in 2007 to Afl. 565.1
     million, an increase of 30.8 percent. Private consumption
     in 2007 increased by 2.4 percent in real terms.


     4.1.4 Investment
     The construction boom seems to have ended in 2007
     when the large investments in 2006, related to the
     construction of the RIU Palace hotel and the Marriot
     Ocean Club Timeshare, were completed. Other planned
     projects appear to have been delayed.          Moreover, the
     statistics of the Department of Public Works, the
     Department of Technical Inspection and the CBS indicate
     a drop in investments. First of all, construction permits that
     were granted in 2006 dropped, which reflects a drop in
     future investments. Secondly, the total volume of imports
     of cement and other construction material also decreased




68
in 2007. Finally, the Partial Economic Activity Index also
shows a slow-down in economic activity in the construction
sector of 10 percent. The reason for this decrease can be
related to the increase of the price of crude oil, which leads
to excessive projects costs and can therefore cause delays
and negative net present values of projects. Taking into
accounts all of these indicators private investments in
Aruba show a decline of 2.0 percent in real terms in 2007.


4.1.5 Imports
The   developments     of   imports   should   be   seen    in
conjunction with the developments in the export sector.
Imports of goods and services in 2007 increased 0.8
percent in real terms compared to 2006. This growth is
mainly due to the strong performance of the export sector,
led by tourism, which requires imports.


4.1.6 Exports
Exports increased in 2007 by 4.9 percent as tourism
recovered from a drop in 2006 and a number of new rooms
opened. The number of stay-over visitors grew with 11.2
percent to a total number of 772.073 visitors. This recovery
is mainly from the US, Canadian, Venezuelan, and
Colombian markets.
For a more detailed review of the Aruban tourism sector in
the year 2007 see chapter 3.




                                                                 69
     4.2 FORECASTING ERRORS


     The macroeconomic model for the Aruban economy plays
     an important role in the elaboration of DEACI predictions.
     The model is supplied with past data and basic
     assumptions about economic policy and international
     developments. The necessary data for the past are taken
     from the CBS wherever possible. If no actual figures are
     available for the past, the DEACI makes its own estimates
     based on expert opinion. The policy assumptions are
     based on the policy intentions set out by the government.
     International economic developments are evaluated by
     DEACI. In this DEACI relies in part on predictions and
     analyses by organizations such as the OECD, IMF and the
     Centraal Planbureau (CPB). To improve its predictions, the
     DEACI uses several other information sources. These
     include the views of experts, for instance with regard to
     investment trends and developments in particular sectors.
     The basis for the model is the Aruba National Accounts
     and results are compared to the figures of the official
     Aruba National Accounts. When there are forecasting
     errors, that is to say significant differences between the
     official Aruba National Account figures and the model
     forecasts, the sources of these differences are identified
     whenever possible and the model is calibrated to improve
     the model’s accuracy in the future.




70
Five sources of forecasting errors can be identified:
  1. imperfections of the model used. This model may
       not adequately reflect the existing connections
       among the economic variables. If there are signs of
       this, the model’s outcomes are of course adjusted,
       but this cannot prevent all the mistakes in the
       model.
  2. wrong or lack of data for economic developments in
       the recent past. This happens, for instance, when
       DEACI’s provisional actual figures turn out to be
       incorrect at a later stage.
  3.   incorrect    policy   assumptions.    The       fact   that
       forecasts rest on economic policy intentions at any
       one time gives them a provisional character. If the
       government changes previously announced policies
       or takes new policy measures, then economic
       developments may well take a different turn than
       projected.
  4.   a wrong assessment of international economic
       developments. Because of the open nature of the
       Aruban economy, this can cause considerable
       forecasting errors.
  5. other information sources used can also lead to
       predictions that turn out to be off the mark.




                                                                     71
     In order to adequately analyze forecasting errors to
     improve the economic modeling there needs to be access
     to enough detailed information regarding the errors. The
     limited amount of detailed information published makes an
     in-depth analysis of the forecasting errors more difficult.
     This is because the source of the difference between the
     National Accounts and the Economic Outlook projections
     can then not be found. When National Accounts becomes
     available in a publication, this can be used to find the
     source of the forecasting. However, with the figures of the
     National Accounts we have calibrated the model to
     improve the model’s accuracy.


     What can be said so far however is that the average yearly
     change in nominal GDP was estimated at 6.0 percent
     while according to the National Accounts the average
     yearly change in nominal GDP was 5.7 percent. Moreover,
     nominal GDP was estimated to have grown to Afl. 4,380
     million, while the actual National Account figures show a
     nominal GDP of Afl. 4,334.10 million. It is noteworthy how
     close these figures are to each other, given the lack of
     data from 2002 onwards.




72
5. OUTLOOK 2008-2009

With the help of the macroeconomic model Maruba
projections have been made of the main macro-economic
indicators for 2008 and 2009. The estimates and
projections presented in this chapter are based on
information available through end-January 2009. In the
third section of this chapter an overview of risk surrounding
these projections are given.




5.1 ASSUMPTIONS


The projections made in this outlook are based on the
following assumptions.
The number of tourism arrivals is expected to grow by 5.5
percent in 2008, as well as for the visitor nights. The
growth in hotel rooms is projected to be around 10 percent.
Due to the financial crisis it is estimated that the number of
tourists will decrease by 7.5 percent in 2009. This
projection is mainly based on expected occupancy, airlift,
marketing and room capacity and prospect for tourism
growth in the Caribbean. There is a great deal of
uncertainty around the projections mainly because of the
lack of recent tourism data in 2008 and the uncertainty
regarding the financial crisis.




                                                                 73
     The statistics from the department of cruise tourism have
     shown for 2008 an increase of 15 percent in cruise visitors
     compared to 2007. This increase is mainly because of
     larger ships with more capacity. There are less calls
     registered for 2008 yet with more capacity visiting Aruba.
     The outlook for 2009 is set on zero growth.


     The government aims to implement the recommendations
     stated in the report of the National Commission on Public
     Finance. The report recommends the government to
     contain personnel expenses and expenses on goods and
     services to a 3 percent and 2 percent growth per year
     respectively as of 2007. Furthermore, it recommends to
     increase the level of investments to 2 percent of GDP as of
     2007. The foregoing assumptions were not taken into the
     projections directly however, instead the budget for 2008
     and 2009, presented by the Department of Finance, was
     used as a basis for this outlook. According to the budget
     2008 the total expenditures will increase with 11 percent
     and will drop with 1 percent in 2009. Personnel expenses
     in 2008 will see an increase compared to the 2007 of 9.3
     percent. In 2009 personnel expenses will increase with 2.8
     percent compared to the 2008 budget. This increase is
     mainly due to the salary increases that the government
     decided upon in the course of 2008. The expenditure on




74
goods and services will increase in 2008 an 2009 with
respectively 12.5 and 6.4 percent.


In the preview years the import price was mainly explained
by the inflation of the US due to the large share of imports
originating in the US. Therefore, US inflation was used as
one of the indicators for the import price of Aruba. We
have seen that since 2007 the development of the
international price of crude oil and the exchange rate of the
US dollar in comparison to the Euro have been influencing
for a large part the increase of the import price of Aruba.
This has resulted in an increase of the inflation rate. The
weight of oil in the consumption basket is estimated to be
15 percent directly, which includes the consumption of
water, electricity and gasoline. Moreover, significant
fluctuation in the euro/dollar exchange rate has been
affecting the inflation rate via our imports from Europe. For
that reason, the estimation of import price for 2008 and
2009 are based on a combination of the different factor
presented above. For these calculations the January
outlook of IMF and estimations of CPB as of December
2008 have been applied.




                                                                75
     5.2 PROJECTIONS


     5.2.1 Gross Domestic Product
     The nominal GDP growth is estimated to be 5.9 percent in
     2007, which results in a nominal GDP of Afl. 4,588 million
     and a real growth of 2.0 percent. This is 0.2 percent less
     than projected in November 2007, which is mainly due to
     an unexpected drop in the private investments. For the
     calculation of the real GDP each GDP component is
     deflated with a separate price index, instead of only the
     CPI. For 2008 the projected GDP is lower than the outlook
     presented in November 2007. The main drivers to a lower
     growth is the unexpected higher inflation which leads to
     less consumption, less private investments and especially
     the drop in tourism in the last four months of 2008. As a
     result, the GDP is set to grow to a nominal value of Afl.
     4,876 million in 2008 which in real terms is a 1.3 percent
     increase. Due to an unexpected financial crisis, leading to
     less tourism, the projections for 2009 are set on a negative
     growth of 2.1 percent for the real GDP, meaning a nominal
     value of Afl. 4,813 million.




76
Tabel 5.1 Macroeconomic outlook 2008 and 2009
                                              2008     2009
Nominal GDP (Afl. mln.)                       4876     4813
Real GDP ( percent)                             1.3     -2.1
                                 *
Private consumption ( percent)                 -0.8     -0.7
                                     *
Government consumption (percent)               -6.9      1.1
                               *
Private Investments ( percent)                 -0.5      0.0
                                   *
Government investment (percent)                 6.3     -1.0
                     *
Exports ( percent)                              3.3     -5.1
                    *
Imports ( percent)                              1.2     -2.0
Inflation ( percent)                            8.0      4.1
*
  Real terms
Source: Department of Economic Affairs, Commerce and
Industry of Aruba


5.2.2 Inflation
Since 2007 Aruba has been experiencing an unforeseen
acceleration in the inflation rate. In the past the import
price was mainly explained by the inflation of the US. We
have seen that the international price of crude oil and the
exchange rate of the US dollar in comparison to the Euro
play a larger role on the increase of the import price of
Aruba. Consequently, this development is affecting the
inflation rate in Aruba. The US is the main source of
imports for Aruba. However, because of the imports from
the Netherlands and the devaluation of the dollar, prices
for products originating from Europe are rising drastically.
Another important development affecting inflation is the




                                                               77
     increase in the international food prices. The period
                                            14
     average inflation for 2007 was 6.0          percent, which is
     partly caused by the introduction of the turnover tax as of
     January 1, 2007. The effect of the turnover tax is estimated
     to be around 3 percent and the remaining changes in the
     yearly domestic inflation levels are mainly caused by the
     increase in the price of water, electricity and gasoline. The
     trend of 2007 has continued into 2008 and therefore the
     period average inflation projected in the outlook of
     November 2008 of 3.9 has been revised to 8.0 percent.
     The difference is related to the high increase in the
     international oil prices which were not foreseen last year.
     This is 4.4 percent more than expected which then affects
     the projected GDP as well. Taking into account the
     projections made by the International Monetary Fund (IMF)
     in November 2008 and the Central Planbureau (CPB) in
     December 2008 with regards to the US inflation, the price
     of crude oil and the exchange rate of the US dollar, the
     inflation rate for 2009 is estimated to be 4.1 percent.


     5.2.3 Exports
     In the first seven months of 2008 the number of tourism
     was strongly growing with an average of 12 percent
     compared to the same period in 2007. Due to a lack of
     tourist data from the Aruba Tourism Authority, the

     14
          Source CBS




78
estimations for 2008 are based on statistics of registered
passenger arrivals by the department of immigration. This
growth is mainly due to a large increase of approximately
10 percent in total available rooms on the island. When the
financial crisis deepened Aruba started experiencing a
drop in visitors. Between September and October Aruba
has experienced a drop of 6 percent compared to the
same two months in 2007. The prospect for 2008 is set on
a 5.5 percent increase in the number of stay-over visitors,
which is 2.2 percent less than the outlook of November
2007. This means a total of 814,537 stayover visitors and
5,738,036 visitor nights in 2008.


Taking into account this information and projections up till
January 2008, it is estimated that the number of tourists
will decrease by 7.5 percent in 2009 compared to 2008
reaching 753,447 number of stayover tourists. This
decrease is based on expected airlift, hotel bookings and
different scenarios that have been considered as well as
on expectations for tourism in the Caribbean. There is a
great deal of uncertainty that may affect this estimation in
the upcoming months. Also, the lack of recent tourism data
in 2008 may increase the uncertainty around the
projections.




                                                               79
     Conversely, the statistics until December 2008 show an
     optimistic development for the cruise tourism in Aruba for
     2008. The number of cruise visitors has grown by 15
     percent in 2008. The trend of 2008 indicates a decrease in
     cruise calls, but an increase in capacity. This means that
     ships with larger capacity are visiting Aruba. It is assumed
     that the global demand for cruises in 2009 will remain at
     the same level as 2008. The projection made for 2009
     takes into account the drop in fuel prices, the planned
     capacity for 2009 and the other recent information from the
     cruise industry which indicates that cruise lines are
     planning to eliminate the fuel tax on the cruise price. As a
     result,   it   is   estimated   that   the   aforementioned
     developments in tourism will lead to a total export value of
     Alf. 3,344 million in 2008 and are projected to decrease to
     Afl.3,061 million in 2009.


     5.2.4 Investments
     After a few years of high growth in the construction sector
     it appears that investments are slowing down. The large
     investments of 2006 in the RIU Hotel and the Marriot
     Timeshare have been completed. According to the
     statistics of the Department of Public Works, the
     Department of Technical Inspections and the CBS, less
     construction permits were granted in 2006 and 2007.
     Given the lag between obtaining the permits and the actual




80
investment, this drop indicates a drop in investments in
2007. Figures on the total imports of cement and other
construction materials also show a decline. In addition, the
PEAI (Partial Economic Activity Index) confirms a slow-
down in the construction sector of 10 percent. Reasons for
this decline can be related to international economic
conditions and the increase in the price of crude oil, which
leads to excessive projects costs. The same reasons
appear to be playing a role in the delay of several real-
estate related projects. Taken into account these indicators
and expert investment opinion, the volume of investments
is expected to decline by 0.5 percent in real terms in 2008,
and remain at the same level in 2009. There is no
indication yet of a change in the projection for the private
investments.


5.2.5 Consumption
After a strong growth in 2007 in private consumption, this
will drop in 2008. Due to the lag-effect of the higher
inflation, lower investments and less growth in tourism,
private consumption is estimated to decrease by 0.8
percent in real terms to a nominal value of Afl. 2,728
million. in 2008. The trend in consumer credit in 2008 also
reflects little growth. In addition, the household survey
carried out by the Aruba Investment Bank, indicates a drop
in consumer confidence in Aruba which may indicate the




                                                               81
     behavior of private consumption in 2008. Moreover, in
     2009 it is expected to reach Afl. 2,823 million, which is a
     drop of 0.7 percent in real terms.


     5.2.6 Imports
     The economy is mainly based on tourism and the local
     population has a high consumption quota for goods and
     services. The value of imports of goods and services is
     estimated to grow from Afl. 3,518 million in 2007 to Afl.
     3,918 million in 2008, which is a 1.2 percent increase in
     real   terms.   Less   private     investments,   less        private
     consumption and higher inflation in 2008 have contributed
     to less growth of import of goods and service than
     expected. This slight growth is due to more export
     proceedings     from    tourism.     Instead,   due      to     poor
     performance of tourism in Aruba it is expected that the
     value of import of goods and services will decline to Afl.
     3888 million in 2009 (-2.0 percent).


     5.2.7 Government
     According to the budget of the Department of Finance the
     total tax revenue of the government will increase in 2008
     and 2009 respectively Afl. 122 million and Afl. 7 million.
     According to budget of 2009 it is estimated that
     expenditure will increase by Afl. 122 million in 2008 and by
     Afl. 14 million in 2009. As a result, the financial deficit will




82
decrease from Afl. 64 million to Afl. 26 million. in 2009.
These estimations are on a cash basis, consequently it
may differ from the transaction basis method that is used
by the Department of Finance. Higher tax revenue (12
percent) in 2008 will be primarily caused by an increase in
tax on wages and income, tax on commodities and
turnover tax. The main factors leading to an increase the
total expenditure of the government of approximately 13
percent are increase in goods and services caused by the
higher inflation, indexation of the wages of the government
employees, and higher public investment. It is important to
note that the financial crisis and the development in
tourism may affect the government revenues.




                                                              83
     Table 5.2 Government Revenue in Afl. million
                                    2007      2008      2009
                                      (1)       (2)       (2)

     Tax revenue                     882      1004      1013

     Taxes on income and profit      313      371        373
     Taxes on commodities            281      301        295
     Turnover tax                    132      160        170
     Taxes on property                59       66         64
     Taxes on services                60       71         76
     Foreign exchange tax             38       36         36
     Nontax revenue                  118      129        138
     Grants                           31       15         23
     1. Figures from Central Bank of Aruba (CBA) on a   cash
     basis
     2. Estimates from the Department of Finance on a cash
     basis




84
Table 5.3 Government expenditure and total debt
                                     2007         2008        2009
                                     (1)          (2)         (2)

Total Expenditure                     1077         1192        1180
Wages                                  301          328         340
Employer's contribution                 87           95          97
Wage subsidies                         142          144         149
Goods and services                     187          210         223
Interest                               107          113         127
Development fund spending               32           32          35
Investment                              19           36          20
Transfer to General         Health
Insurance (AZV)                             85          137         88
Items n.i.e.                               117           98         98

Lending minus repayments                    21          20          20
Lending                                     24          28          28
Repayments                                 -2.4         -8          -8

Financial surplus (+) deficit (-)          -65          -64         -27

Total debt                         2138 2138 2112
1. Figures from Central Bank of Aruba (CBA) on a cash
basis
2. Estimates from the Department of Finance on a cash
basis




                                                                          85
     Figure 5.1 Government operations in percentage of GDP

       60
       50
       40                                     Government Debt
                                              in % of GDP
       30
       20                                     Government
                                              Expenditure in %
       10                                     of GDP
        0
            2003 2004 2005 2006 2007 2008

     Source: Department of Finance



     5.3 RISKS


     The risks surrounding this outlook are mainly related to
     external developments because of the open nature of
     Aruba’s real sector and the small size of the economy. The
     outlook may turn out more negative depending on the
     duration and depth of the credit crunch. The risks are
     mostly on the downside as our main source country of
     tourism income is the US, which has been at the center of
     the global financial and economic crisis. If the credit-
     crunch may impose a larger constraints on consumer
     spending than expected and if housing price correction in
     the US will take longer than currently expected this may




86
weigh on the Aruban tourism industry, and thus exports.
There is    also uncertainty surrounding the       inflation
pressures as inflation pressures around the world may
prove more persistent than expected. This would lead to a
lower real GDP and depressed consumption.


As the credit-crunch may impose larger constraints on
activity, housing price corrections may extend into 2010
and inflation pressures may prove to be more persistent.
Upside risks are that US firms may be able to maintain
their spending patterns better than expected, despite
financial strains, which would provide extra support for
household incomes and therefore stimulate them to
increase spending on tourism. Tighter external financing
conditions due to the credit crunch and a worse than
expected global economic outlook may also lead to delays
or cancellation of planned investment projects.


An upside risk is the possibility that the government may
invest more than budgeted, due to a windfall increase in
revenues related to a settlement reached with the Dutch
                                  15
government regarding Plant N.V . How and when this
money will be invested is still uncertain and therefore not
included in the baseline scenario. Another domestic upside

15
  See Memorandum of Understanding regarding Plant N.V. of
September 29th, 2008.




                                                               87
     risk is that consumer confidence may increase because of
     the drop in commodity and gasoline prices lower interest
     rate on mortgages which can stimulate the investments in
     housing market. Being an important Carnival year this may
     contribute to more consumption. An external upside risk is
     that the global down-turn may stimulate US to travel closer
     to home and to more familiar places thereby supporting the
     Aruban tourism industry.


     If downside risk materialize we may end up in the worst
     case scenario, which according to the Maruba projections
     could mean a decrease in real GDP up to 3.9 percent.
     Conversely, if the effect on tourism is limited and Aruba
     experience windfalls the real growth will be limited to -1.3
     percent increase, which is the best scenario for 2009.




88
6. APPENDIX

Macroeconomic indicators and projections 2007-2009



                                               2006   2007    2008   2009
Consumption price                   percent     3.6    6.0     8.0    4.1
Import Price                        percent     4.8    5.0    10.0    1.3


GDP at market prices                mln. Afl   4334   4588    4876   4813
Household consumption               mln. Afl   2322   2549    2731   2823
Government consumption              mln. Afl   988     960    1044   1088
Private investments                 mln. Afl   1430   1490    1614   1660
Government investments incl.
Development fund spending (FDA)     mln. Afl     67     68      75     77
Exports of goods and services       mln. Afl   2824   3063    3344   3061
Imports of goods and services       mln. Afl   3295   3518    3918   3888


Household consumption*              percent     2.0    3.5    -0.8    -0.7
Government consumption*             percent     2.3    -8.3    0.5    0.4
Private investments *               percent     5.2    -1.5   -0.5     0.0
Government investments*             percent    -3.5   -25.0   22.4   -21.7
Exports of goods and services*      percent    -3.6    5.0     3.3    -5.1
Imports of goods and services*      percent    -1.2    1.7     1.2    -2.0
Nominal GDP growth                  percent     4.2    5.9     8.0    -1.3
Real GDP growth **                  percent     0.5    2.0     1.3    -2.1


Total tax revenue and grant         mln. Afl   991    1028    1148   1174
government
Total expenditure government        mln. Afl   1096   1070    1192   1178
Financial surplus (+) deficit (-)   mln. Afl   -112    -60     -64    -27
Total debt ***                      mln. Afl   2012   2138    2254   2302
Tax in % of the GDP                 percent    19.8   19.2    20.6   21.0
Expenditure in % of the GDP         percent    25.3   23.3    24.5   24.9




                                                                     89
                                                     2006       2007       2008         2009
Debt in % of GDP                      percent        47.2       48.4        46.2         47.8
GDP per capita                           Afl.      42081       44702      46145        45831
End-year population                   number      103000     104494      105676        105017


Total hotel rooms                     number         7316       7411       8147         8229
Visitors nights * 1000                number         5471       5880       6203         5738
Number of stayover visitors *1000     number          694        723        815          753
Cruise passengers *1000               number          591        482        556          556
Tourism receipts                      mln. Afl       1917       2264       2335         2031


Total hotel rooms                     percent          4.4        1.3        9.9          1.0
Visitors nights                       percent         -3.9        7.5        5.5         -7.5
Number of stayover visitors           percent         -5.2      11.2         5.5         -7.5
Cruise passengers                     percent          7.0        8.2       15.4          0.0
Tourism receipts                      percent         -1.8      17.1        11.0        -13.0
*
  Real terms
**
  For the calculation of the real GDP each GDP component is deflated with a separate
price index, instead of only the CPI. For calculation of the GDP according to the
National Account the CPI must be applied. In the current condition the export price
and the import price may vary from the CPI which makes is necessary to use a
separate deflators.
***
    Debt payments made with funds received from settlement of Plant N.V. are not
included.

Source:
Department of Economic Affairs, Commerce and Industry
Central Bureau of Statistics
Central Bank of Aruba
Department of Finance




     90
                                                             Aruba Economic Outlook 2009
                                                                                           Aruba
                                                                                           Economic
                                                                                           Outlook
                                                                                           2009



                Economic Outlook 2009 is a publication of:
The Department of Economic Affairs, Commerce & Industry,
                                 The Goverment of Aruba.
         L.G. Smith Boulevard no. 160, Oranjestad, Aruba.

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:3
posted:10/26/2012
language:Unknown
pages:91