Aruban economy: Periodic waves of prosperity.

First it was gold, then oil, and now tourism. Aruba has a interesting economic history with waves of prosperity sweeping the Island at different times on the back of a different industry.

Till the beginning of the twentieth century, the Island’s economy was transformed with the discovery and exploitation of gold reserves. For nearly a century, the Island maintained its golden hue, until it was replaced with an equally valuable resource, though black in color.

The discovery of oil soon led to another boom, and Aruba rode piggyback on the slippery stuff to achieve great heights economically. At one time Aruba boasted of the world’s largest oil refinery and storage facility. And now, tourism is witnessing a similar boom, so much so, that the Government has imposed certain restrictions on its further expansion!

Aruba is an independent entity under the Kingdom of the Netherlands, and is a popular tourist destination. The development of tourism has given a boost to related industries like construction, hotels, transport, telecommunications, etc. All this has created tremendous opportunities for Arubans to improve their lifestyle and lead a more prosperous life.

Apart from tourism, Aruba exports live animals and animal products, machinery and equipment, and imports crude oil, chemicals, foodstuffs, etc. The United States and the Netherlands are Aruba’s major trading partners. There is very little unemployment on the Island.

The Government has initiated steps to diversify the economy in order to reduce its dependence on tourism. Another area of concern is the budget and trade deficits. A potential area of internal disturbance and conflict in regard to total independence from the Netherlands seems to have subsided, at least for the present.

Dutch economy: More bad news.

The Dutch are good at defending themselves against the ravages of the sea, as they have been doing for long. However, they may need much more than such skills to defend themselves from the ravages of the economic crisis that they are facing as a fallout of the global crisis.

According to a recent statement of the Central Planning Agency, the Dutch economy is in for some rough weather in 2010, which is being dubbed as a “crisis year”. Even the Dutch Queen has warned of tough times ahead for the country. The present crisis is said to be the worst since the Great Depression of the 1930s.

Almost all the economic indicators show a downward trend. Production is down throuhout the year. Unemployment is climbing effortlessly, and is expected to hit the 8% mark next year. The Dutch Government is ready with its plans to counter the recession. One of the most significant steps taken is the initiatin of the economic stimulus package. Public spending is expected to soften the blow of the recession on the Dutch citizens.

On the flip side, however, these measures are likely to widen the budget deficit correspondingly. The Governmen’s infusion of massive funds to the tune of USD 50.00 billion to rescue its failing Banks have had a major impact on public finances. The public has had to pay for this through higher taxes.

The political establishment is keen to avoid imposing additional burdens on the people, as they have to face the electorate in a general election in 2011. So the Dutch Government appears to have adopted a strategy to initiate adhoc measures to keep the economy going till the elections are over, and thereafter come out with a reforms package that is likely to be painful for one and all.

Hopefully, things would not get worse by that time, necessitating a about turn in official thinking.