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Aruba Economy
 
 
 

General

Aruba enjoys one of the highest standards of living in the Caribbean region including a low unemployment rate. About three quarters of the Aruban gross national product is earned through tourism or related activities. Most tourists are from Venezuela and the United States (predominately from eastern and southern states). Before the "Status Aparte" (a separate completely autonomous country/state within the Kingdom), oil processing was the dominant industry in Aruba despite expansion of the tourism sector. Today, the influence of the oil processing business is minimal. The size of the agriculture and manufacturing sectors also remains minimal.

With such a large part of its economy dependent on tourism, the Aruban government is striving to increase business in other sectors to protect against possible industry slumps. Their current focus is on expanding technology, finance, and communications.

The GDP per capita for Aruba was calculated to be $23,831 in 2007; among the highest in the Caribbean and the Americas. Its main trading partners are Venezuela, the US and the Netherlands.

Deficit spending has been a staple in Aruba's history, and modestly high inflation has been present as well. Recent efforts at tightening monetary policy are correcting this and Aruba will have its first balanced budget in 2009. Aruba received some development aid from the Dutch government each year through 2009, as part of a deal (signed as "Aruba's Financial Independence") in which the Netherlands gradually reduced its financial help to the island each successive year. The Aruban florin is pegged to the US dollar, with a fixed exchange rate of 1.77 florin to $1.

In 2006 the Aruban government has also changed several tax laws to further reduce the deficit. Direct taxes have been converted to indirect taxes as proposed by the IMF. A 3% tax has been introduced on sales and services, while income taxes have been lowered and revenue taxes for business reduced by 20%. The government compensated workers with 3.1% for the effect that the B.B.O. would have on the inflation for 2007. The inflation on Aruba in 2007 was 8.7%.

Overview

Economy - overview :
Tourism is the mainstay of the small open Aruban economy, together with offshore banking. Oil refining and storage ended in 2009. The rapid growth of the tourism sector over the last decade has resulted in a substantial expansion of other activities. Over 1.5 million tourists per year visit Aruba with 75% of those from the US. Construction continues to boom with hotel capacity five times the 1985 level. Tourist arrivals rebounded strongly following a dip after the 11 September 2001 attacks. The government has made cutting the budget and trade deficits a high priority.

GDP (purchasing power parity) :
$2.258 billion (2005 est.)

GDP (official exchange rate) :
$2.258 billion (2005 est.)

GDP - real growth rate :
2.4% (2005 est.)


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