Private sector credit grows, external trade drops


Photo: Nishan Ali / Mihaaru

The credit to private sector posted an annual growth of 6% at the end of August 2019 compared to the corresponding period in 2018.

According to Maldives Monetary Authority’s (MMA) latest monthly economic statistics – with regard to main sectors that account for the highest total private sector credit, the growth in private sector credit increased for all sectors except commerce.

The credit to commerce sector had remained noticeably slow and on top of that recorded an annual decline of 7% in August 2019 and this stemmed majorly from the decrease in loans to wholesale and retail trade activities coupled with the decline in credit lent to restaurants and cafés.

The private sector also involves a major portion of trade or trade affiliated ventures; namely the businesses related in export of goods to foreign destinations as well as wholesale and retail traders that depend on imported goods.

The latest statistics indicated that the total exports – on F.O.B basis – declined by 24% while the total imports – C.I.F basis – dropped by 19% during August 2019 compared to the same month last year.

The decline in the total exports stemmed from the decrease in both domestic exports and re-exports during the review quarter – Q3 of 2019. Meanwhile the domestic exports declined due to the significant drop in fish exports which is also the largest component of the domestic exports.

Decrease in the total imports came strongly from the significant decline in imports of construction related items – wood, metal, cement and aggregates as well as other construction items – and the drop of import of petroleum products. A major reason for the decline in construction related items comes from several large-scale construction projects either getting completed or coming to a wind up prior to the review quarter.

Though the exports declined in August, the overall year-to-date trend of exports observed an increase of 16% while total imports decreased by 6% compared to the corresponding period of 2018.