The economy of St. Maarten indicated signs of recuperation in the Second Quarter of 2003. This is an overall indication as many of the indicators experienced some recovery, while others observed milder recoveries. The findings are supported by the comparisons of 2003 relative to corresponding periods of both 2002 and 2001, to factor out external factors such as delayed effects of September 11, 2001. Given the above-mentioned, the economy is considered to have shown signs of recovery.

The Department of Economic Policy & Research utilizes the Turn-over-Tax (ToT) as our most comprehensive indicator to measure overall economic performance. When we compare all data angles of 2003 with 2002 and 2001, we observe growth in the economy. On a half-year and quarterly basis comparison, we observe positive increases, when we compare 2003 to the same relative period of 2002 and 2001. This seems to suggest that the economy is continuing to expand.

Considering that St. Maarten’s economy is primarily tourism based, it is essential to observe developments in the tourism sector to ascertain an indicative performance of the economy. For this reason, we look at the performance of stay-over tourism, which have shown signs of recovery when we compare the first half of 2003 with 2002. However, when we compare the same period (i.e. 1st half of 2003) with the corresponding period of 2001, to factor out delayed effects of 9-11, we still witness recovery. It should be noted that the recovery is still not to the level it was to the same period in 2001. Nevertheless, there is still clear recovery.

The pattern of recovery was also evident in the developments of the cruise industry. The quarterly performance in 2003, compared to 2002, has shown increasing numbers, however not by the same high double-digit increases as in previous quarters/years. However, it should be noted that despite the above-mentioned, when we compare Quarters 1 & 2 of 2003 with the same period of 2001, we do observe strong recovery.

The performance of the tourism sector was also supported by the tourism-based government revenue indicators such room, car rental, and timeshare. The same recovery pattern that was evident with the tourism sector (i.e. stay-over and cruise) was also evident in the tourism-based government revenue. However, contrary to this observation this occurrence did not trickle over to occupancy rates as a decrease was observed in the performance of this indicator.

When we look at the other sources of government that are not based primarily on tourism, we observed mixed findings as some government revenue showed increases while others showed decreases. It should be noted that there is an underperformance of the government revenue in general; however, recovery patterns are still evident.

Observing developments in the banking sector also experienced mixed findings as residential deposits showed an increasing recovery in Quarter 1 & 2 of 2003, compared to 2002. However, residential loans remain flat in the same period. It should be noted that the residential loans are at an extremely low level relative to historical figures. This pattern of low level of residential loans has been evident for some time and subsequently, has resulted in banks offering lower interest. However, the low level of loans is still persistent. The reason is rather unclear, whether it is a question of lack of demand, lack of confidence in the economy, uncertainty of the future, job security, etc. Despite the above-mentioned, banks have been trying to compensate for this void by offering more short-term loans such as car and personal type of loans (i.e. current loans).

Developments in the labor market have also illustrated the same relative pattern of recovery. This was evident as the social premium of AVBZ experienced a recovery in 2003 compared to 2002. The quarterly performance moved from the negative to just about positive. This pattern was supported by wage tax of the government revenue, which also observed a strong increase in revenue. It should be noted that the marginal positive increase of in particular, wage tax, indicates a source of concern as it serves as a primary/main income sources of revenue for the island government. In addition, developments in the labor market are also very important for the performance of the economy in general.

Water and Electricity developments have both shown positive developments, when we take the various sectors (i.e. domestic, commercial and large consumers) into account in the 1st and 2nd quarter of 2003, compared to 2002. The only exception to the positive indicators, as it relates to this activity is the continued decrease in large consumer electricity productivity. However, all other electricity and water production sectors have demonstrated increases.

Even developments in the gasoline industry seem to support the recovery of the economy as well. There are growth figures in the gasoline industry, despite one of the wholesalers performing relatively poorly, which is merely market share issue as oppose to the economic situation. This assertion is based primarily on the fact that the other wholesaler of gasoline has acquired significant increases in their performance.

In conclusion, the rebounding of the economy is certainly evident in the first half of 2003, compared to 2002. Even when we utilize the same indicators and compare 2003 with 2001, we observe the same pattern of recovery. This gives us reason of hope and to illustrate that our efforts are paying off its’ dividends. Barring no hurricanes, the pattern should remain consistent especially, with the many developments taking place such as the acquisition of additional stay-over tourist markets (i.e. diversification of the tourism market as indicated in previous economic reports and in our CEDP), additional airlift from European markets, and continued increases in cruise tourism. In addition, expectations of the additional mega yachts and marine business for the upcoming season, as a direct result of the widening of the channel into the Simpson Bay Lagoon, will trickle over into the local domestic economy. There are a number of hotel/Timeshare construction projects (as well as general construction) taking place that will maintain economic activity of the economy of St. Maarten.