Maldives Monetary Authority (MMA) reports the country’s strong economic recovery trajectory, is expected to continue in 2023.
According to the central bank, this strong recovery trajectory is expected despite the negative global “headwinds”. MMA reports the country’s domestic economy is expected to grow by 12.3% in 2022 and reach pre-pandemic levels of output by the end of the current fiscal year.
This robust economic growth projections for the country’s economy is mainly reflected from the strong performance of the tourism sector. Tourist bed nights for 2022 registered a 33% growth during first three quarters of 2022. The sector is expected with further growth rates in the following year.
Moreover, the latest forecast indicate Maldives real Gross Domestic Product (GDP) growth of 7.6% is greater than the average growth rates registered by the domestic economy before the Covid-19 pandemic.
Despite strong tourism recovery, the current account deficit for the year expects widening to 18% of GDP in 2022, from 8% in 2021.
Hikes in global commodity prices, specifically of oil, total expenditure on merchandize imports are expected to bump from USD2.4 billion last year to USD3.2 billion in 2022.
Current account deficit for the year is expected to be financed primarily by foreign direct investment (FDI) inflows. Additional to this, finances will be made from drawing on commercial bank deposits abroad, and borrowings by government and private sector.
Projections for 2023
- Current account deficit expect exceeding overall financial account position during 2022
- Overall balance of payment will likely record a deficit of USD167.4 million
- Gross International Reserves (GIR) expect decline to USD638.4 million in 2022 from USD805.8 million in 2021
- Current account deficit expected to narrow to 15% in GDP by end of 2023 (owing to moderation of oil prices, forecast growth of tourism and overall economy)
- Current account deficit projected to be financed by Foreign Direct Investment (FDI) inflows, borrowings by government and private sector
- Domestic inflation rate moderated slightly from 2.9% in Q2-2022 to 2.7% in Q3-2022
- Inflationary pressures from high commodity prices will remain sustained
- Domestic inflation rate expect to remain high in 2022 and average at 2.2%
- GGST hike from 6 to 8% in 2023, with targeted fuel and electricity subsidy policy, with high global inflation rates, domestic inflation rate will accelerate to 5.4% next year