Aruba's economy: the island that swapped a refinery for hotels

What Aruba lived on before tourism

The Spanish found nothing to mine and the soil would not support plantations, so for three centuries Aruba produced horses, livestock and a little salt. The first cash industries came in the nineteenth century, and the sources date them differently. Britannica and the Wikipedia article on Aruba give 1824 for the discovery of gold, while the Wikipedia article on the island's economy gives 1800; that article says the supply was largely worked out by 1916. Aloe arrived in 1840 by one Wikipedia account and 1850 by the other, and became a large export by 1890. Aruba Aloe, which the economy article calls the oldest company on the island, still makes aloe products, mostly for the home market, with an export deal struck with a United States company in 2005.

None of these made the island prosperous. Britannica describes the economy as weak until the 1920s, and the Wikipedia article on Aruba calls the island underdeveloped and economically disadvantaged through the nineteenth century.

How the refinery built the economy and left

Oil changed that. Lago Oil and Transport began shipping Venezuelan crude through San Nicolaas in 1924, and its refinery, owned by Standard Oil of New Jersey, later Exxon, grew into a plant employing more than 10,000 people after the Second World War. A second and smaller refinery, the Arend Petroleum Company, worked at Druif from 1927 until 1953. By 1984, the Aruba Tourism Authority records, tourism was already a well-developed sector of the economy beside oil refining.

Exxon closed Lago on 31 March 1985. The refinery had provided 30% of Aruba's real income and 50% of government revenue, and unemployment rose to almost 20%. The Aruba Tourism Authority attributes the closure to falling market value and cuts in the supply of Venezuelan oil.

Why the refinery kept reopening

The plant was sold on rather than dismantled completely. The Coastal Corporation reopened it, in 1990 according to Britannica and the tourism authority and in 1991 according to the Wikipedia article on the economy, and later sold it to Valero Energy, which that article dates to 2004. Britannica has the refinery reaching full production by 1993 and closing again in 2012 after years of losses; the Wikipedia economy article gives 2009 for the closure. In 2016 the government signed a deal with Citgo, the American subsidiary of Venezuela's state oil company, to restart the 235,000 barrel a day plant. Citgo ran out of money after United States sanctions on its parent in early 2019, and on 9 October 2019 Aruba signed a memorandum taking the refinery, dock and terminal back. The government has since decided to close the oil industry for good and to set the site aside for renewable energy, innovation and circular economy projects.

The refinery's shadow still shows in the trade figures. In the IMF's balance of payments table for 2024, the oil account ran a deficit of 12.6% of GDP, against a non-oil surplus of 22.0%.

How Aruba built a tourism industry

Tourism started before the refinery closed. The Aruba Tourist Commission was set up in 1947 under Ernst Bartels and became the Aruba Tourist Bureau in 1953, a staff of two. The tourism authority records that automation at Lago cost many jobs in the 1950s and that the Dutch government proposed tourism as the replacement. The Caribbean Hotel, the first multi-storey resort, opened in 1959, and by 1977 there were 16 hotels with 2,148 rooms, five of them with casinos.

In January 1983 the American firm Sasaki Associates finished a six-month study of the coast from Oranjestad to California Point, and that strip became the tourism corridor, served by government investment in roads and water mains. After 1985 the pace changed. The government replaced the tourist bureau with the Aruba Tourism Authority in 1986, invested in infrastructure for hotels and later took part ownership of three hotels with about 600 rooms between them. The room count went from 2,776 in 1986 to 5,625 in 1991 and 7,103 at the end of 1996, of which 2,272 were timeshare units. Timeshare grew about fivefold over the same years, from 337 units in 1986 to 1,967 in 1991. The tourism authority states that Aruban tourism grew at almost twice the rate of the Caribbean as a whole between 1986 and 1996. Wikipedia records that a one-year moratorium on new hotel construction followed when jobs could not be filled.

Where the visitors come from

The figures below are stayover visitors, those who spend at least a night, and leave out cruise passengers.

The 2018 figures are from the Wikipedia article on Aruba and the later ones from the Aruba Tourism Authority, as published by the government. Stayover arrivals rose by 12.8% in 2024. The IMF reported growth slowing to 4.8% year on year by September 2025. Hotels stand in two clusters, the high-rise strip at Palm Beach and the low-rise one at Eagle Beach and Punta Brabo, and the tourism authority notes that most are foreign-owned and many carry international brands. Cruise ships dock at Paardenbaai in Oranjestad, the terminal served by every major cruise line according to the Wikipedia article on Aruba.

What the economy looks like in the official figures

The two official sources for recent growth do not agree. The Centrale Bank van Aruba, in its State of the Economy report published on 1 September 2025, gave real growth of 6.9% for 2024 and 7.7% for 2023. The IMF, in its consultation concluded on 21 November 2025, estimated 8.9% for 2023 and 7.6% for 2024, and described the 2024 figure as the central bank's estimate. Both attribute the growth to tourism and to private investment, much of it in hotels. The central bank noted that output per person grew more slowly than the total because the population had risen.

Unemployment fell to 4.3% in 2024 by the IMF's count, against an average of 8.0% from 2000 to 2019, helped by more people entering the labour force. The Wikipedia article on the economy describes a small labour force with many vacancies left unfilled, and the Wikipedia article on Aruba gives a labour force participation rate for women of 56.6% at the end of 2018. Inflation, which the IMF recorded peaking at 7.7% year on year in August 2022, had turned to minus 0.4% by September 2025.

How the florin stays pegged to the dollar

The Aruban florin is pegged to the United States dollar, and the Wikipedia article on Aruba, as revised in September 2026, gives the official rate as 1.80 florins to the dollar. Keeping that fixed value is the Centrale Bank van Aruba's primary mandate. Because most visitors are American, hotels and resorts in the tourist districts prefer to trade in dollars.

A peg holds only as long as the reserves behind it do. The central bank reported that more money entered the economy than left it in 2024, with tourism services the main source of receipts, and described its reserves as amply adequate. The IMF put gross official reserves at US$1,932 million in 2024 and projected them to rise to US$2,266 million in 2025. It found the external position stronger than fundamentals would imply, and advised the central bank to keep its reserve requirement where it was and to stand ready to raise it if reserves came under pressure.

What else Aruba earns from

Tourism dominates, but it is not the whole economy. Britannica lists offshore banking and other financial services, a free-trade zone and a data-processing sector, and the Wikipedia article on Aruba names two free zones, Barcadera and Bushiri, where imports, exports and services are free of tax. The Wikipedia economy article lists aloe cultivation, livestock and fishing, and exports of art and collectibles, machinery, electrical equipment and transport equipment. Agriculture and manufacturing remain small, as the State Department noted in 2005.

The country's main trading partners, according to the Wikipedia article on Aruba, are Colombia, the United States, Venezuela and the Netherlands.

Energy is one place the diversification is visible. The utility WEB Aruba completed the 30 megawatt Vader Piet wind park at the end of 2009 and a 7.5 megawatt solar park at Lago Heights in 2018, and it gives its objective as producing half its energy from renewable sources, a step it tied to a new 102 megawatt engine plant commissioned in June 2022. The IMF's 2025 consultation named the government's Promising Sectors initiative and its renewable energy plans as possible routes away from dependence on tourism, and argued that the limits to further tourism expansion made new sources of growth necessary.

How the government pays its way

The central government ran a surplus in 2024. The IMF put its revenue that year at 24.5% of GDP and its spending at 20.8%, an overall surplus of 3.7% and a primary surplus, before interest, of 7.7%, and it projected smaller surpluses of 1.8% in 2025 and 1.2% in 2026. The central bank linked the rise in tax revenue in 2024 to a tighter labour market and higher economic activity. The tax system had been reshaped in 2006, when several laws were changed to reduce the deficit and direct taxes were converted into indirect ones, as the IMF had proposed.

The Fund's list of fiscal risks is mostly long term. It pointed to the social security and health insurance systems, where contribution rates, replacement rates and possibly the retirement age might have to change, and to state-owned enterprises, whose financial oversight it wanted strengthened. It also noted large debt repayments falling due and asked for a careful strategy to manage them, and it wanted the status and governance of a proposed government investment fund clarified before money went into it.

Why the IMF says tourism has reached its limits

The Fund's 2025 assessment described strong tourism demand as straining infrastructure, the labour market and the availability and cost of housing, and warned that those bottlenecks could hold back medium-term growth if left alone. It supported what it called a High-Value-Low-Impact tourism model. The Aruba Tourism Authority, in its 2024 business plan, acknowledged community concern about the pressure of high visitor numbers and said sharper changes were needed to steer tourism in a sustainable direction. The authority's own monitoring now covers short-term vacation rentals, the homes, apartments and villas let to visitors, whose average occupancy it put at 59.7% in December 2024, up from 58.9% a year earlier.

The Fund also asked for faster publication of statistics. It noted the lack of timely national accounts and recommended that the Central Bureau of Statistics build quarterly indicators and expenditure-based estimates of output. The public finances are a separate constraint: since 2015 Aruba's budgets have been supervised under an arrangement agreed with the Netherlands, described in the politics of Aruba, after debt rose above 80% of GDP.