Asian Development Bank (ADB) forecasts a surge in Maldives Gross Domestic Product (GDP) from 5.4% in 2024 to 6.0% in 2025.
The international financial institution confirmed this on its Asian Development Outlook for April 2024, in which it noted the Maldivian economy experienced a notable muddied growth last year, with a preliminary estimate of 2.7% year-on-year growth in the first three quarters.
Fisheries, transportation, communication, construction, and real estate sectors showed positive growth and stronger performances since last year. Despite a 12.1% bump in tourist arrivals, tourism-related earnings did not witness a correlation in receipt increment.
Tourism-related receipts dropped by 6.0% yearly, mainly owing to pre-booked travel arrangements to avoid the planned hike in the goods and services tax (GST) rate. The average guest stay contracted to 7.6 days from 8.0 days in the preceding 2022.
ADB also highlighted inflationary pressures last year, which had been the result of GST rate hikes. Inflation jumped to 2.9% in 2023 from 2.3% the year before, mainly because of the GST rate increment by 40.0% for the general sector and 33.3% rise for the tourism sector.
Fiscal deficit stretched to 14.1% of Maldives GDP in 2023, higher than initial forecast of 13.8%. Total state revenue, including foreign grants, increased by 9.8% to 29.9% of GDP while state expenditure saw prompter growth, reaching 44%.
While the Maldives GDP is expected to rise to 5.4% this year and to 6.0% in the next, inflation is forecast to rise to 3.2% in 2024 before easing at 2.5% in 2025.
Fiscal deficit is projected to drop but remain significant, expected to hit 12.3% of GDP this year and stay above 10.0% of GDP in 2025.
The current account deficit is expected to contract on higher tourism receipts and import price easements, declining to 16.0% of GDP in 2024 before jumping to 17.0% in 2025.
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