, the 14. 1 % ( in 2017 ) unemployment rate in curacao is among the highest in the caribbean region and is expected to remain around 13 / 14 % in the coming years. important to mention is that the positive development in 2019 is only possible under the assumption that the expected private investments indeed take place and the investments that are currently ongoing indeed finalize. as i have already shown on the previous slide, we expect a slight economic growth for 2019. however, there are some risks and challenges that could put a drag on our growth prospects for 2019 and beyond. i would like to focus on three of them. first, our exposure to venezuela. second, the developments in the international financial services sector, which is one of the pillars of our economy. and third, our public finances with a special focus on the hospital nobo otrobanda. because of our geographic proximity, venezuela has always been one of our main trading partners. consequently, activities in key economic sectors of our economy were affected by the deep recession and unstable situation in venezuela of the past years. the pie charts on this slide show curacao ’ s exports, imports, and total trade by geographical area. as shown in the first pie chart, venezuela is curacao ’ s second most important export market with a share of 17. 9 % of the total exports of goods and services. it is important to note that the bulk of foreign exchange income from venezuela is generated from the refining activities of the isla refinery. in the second pie chart, it is shown that venezuela ’ s share in curacao ’ s import of goods and services is 16. 5 %, thereby making it the second highest after the united states. curacao imports primarily merchandise from venezuela, of which oil ( 89 % ) is the most important product. a breakdown of total trade, i. e., the sum of export and import of goods and services, as shown in the third pie chart, reveals that venezuela is curacao ’ s second most important trading partner with a share of 17. 2 % of total trade. to assess the effect of trade with venezuela on the real gdp of curacao, we calculated a scenario in which all trade transactions between curacao and venezuela were removed and a scenario in which all transactions with only the isla refinery were removed. as venezuela is one of curacao ’ s main trading partners, a discontinuation of all trade will have a negative effect on real gdp

good afternoon rotarians, ladies and gentlemen, first allow me to thank rotary club of curacao for the invitation to give a presentation today on a very important topic, “ achieving a higher and more inclusive growth path for curacao ”. for some years already, the economic performance of curacao has been disappointing. it is therefore necessary that we change this negative trend and realize a higher pace of growth. today i would like to discuss with you some challenges that may pose a downside risk to our growth prospects. furthermore, i will provide some policy recommendations to achieve a higher and more inclusive growth path. let me emphasize in this context that inclusiveness is crucial. evidence suggests that when the benefits of growth are shared more broadly, growth is stronger, more durable, and more resilient. let me start by giving you a brief overview of our recent economic performance and prospects. as you can see in this table, the current account of the balance of payments of the monetary union will worsen in both 2018 and 2019 due mainly to a decline in exports combined with an increase in imports. meanwhile, gross foreign reserves of the central bank are projected to increase as foreign financing will be more than sufficient to cover the current account deficit. in 2018, real gdp is projected to contract by - 1. 6 % in curacao. domestic demand will decrease because of a decline in private consumption, public investment and consumption. private consumption will decline because of lower disposable income due to higher inflationary pressures and the worsened situation in the labor market. public investment will decline because the construction of the new hospital is reaching its final stages, and consumption because of less spending on goods & services and on wages & salaries. imports will increase because of more imports by the manufacturing and wholesale & retail trade sector, while exports will rise because of more tourism activities and more bunkering activities. for 2019, a slight real gdp expansion of 0. 4 % is projected supported mainly by private investment growth in the hotels & restaurants, transportation, and utilities sectors. also, exports will increase because of more air transportation, tourism, and ship repair activities. imports will also increase thanks to the private investment growth. changes in international oil and food prices have a considerable impact on our local prices. consequently, the inflation rate is projected to increase to 2. 2 % in 2018 on the back of higher international oil and food prices. in 2019, inflation will ease slightly due to a projected decline in international oil prices. meanwhile