S&P cuts Aruba

S&P said it trimmed Aruba’s long-term foreign and local currency sovereign credit ratings by one notch to BBB from BBB+.

“The sudden stop of tourists in 2020 due to the Covid-19 pandemic, and persistent outbreaks and travel restrictions in 2021, will cause Aruba's economy, which is almost entirely dependent on the tourism industry, to be weaker for longer. We now estimate that the economy, which experienced a 67% drop in stay-over tourists in 2020, contracted by more than 30% in 2020, which will likely be one of the largest contractions of any country in the world in 2020,” the agency said in a press release.

Compounding the challenges, S&P said it forecasts the economic recovery will take longer than expected. “Although we expect the economy will return to growth in 2021, we believe that a larger acceleration of growth will not occur until 2022, which will likely be the first full calendar year when neither Aruba, nor its major tourism source markets, have significant travel restrictions in place,” the agency said.

The outlook is stable.

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