Asian Development Bank (ADB) has revealed the gross domestic product (GDP) growth of the Maldives is projected to grow by 11% this year, which is the highest compared to other South Asian countries.
The recently published Asian Development Outlook 2022 report shows the Maldives experienced a GDP growth of 31.6% in 2021 after it contracted by 33.5% in 2020 due to the COVID-19 pandemic. ADB stated the rebounding of the tourism industry in the country and the re-opening of borders led to the economic recovery and that growth in the Maldives will slow but remain strong, which will be supported by the recovery in global tourism.
Furthermore, ABD stated the current account deficit markedly improved in the Maldives last year and that tourist arrivals are expected to fall in 2022 from last year’s high because of geopolitical events, but are expected to strengthen next year. It stated the strong economic recovery will be sustained by substantial tourism activity and the start of construction on large public infrastructure projects.
Additionally, ADB stated GDP is projected to grow by 11.0% in 2022 and 12.0% in 2023, which would bring GDP to 8.8% above the 2019’s level. It stated the main downside risks to the forecasts are a new global wave of COVID-19 outbreaks and the possible emergence of more virulent variants, and geopolitical fallout from Russian invasion of Ukraine. It stated both would weigh heavily on tourism growth, reduce government revenue, and threaten fiscal and debt sustainability.
ADB further stated Inflation is forecast to rise to 3.0% in 2022, mainly on expected higher prices for imported oil products and expansionary economic policies, including a minimum wage from January 2022. Inflation is expected to slow to 2.5% in 2023 on moderating global prices of energy and non-energy commodities.