The World Bank has stated that the Maldives economy has recorded a strong recovery amid existing weaknesses and global challenges.
In the regional update for the Maldives, the World Bank stated the economy, buoyed by a strong rebound in tourism, is projected to grow at 7.6% in 2022 and fully recover to pre-pandemic levels by 2023, but the country’s high debt levels are a major concern.
Furthermore, the World Bank projects the South Asian region to grow by 6.6% in 2022 and by 6.3% in 2023. The 2022 regional forecast has been revised downward by 1.0 percentage points compared to the January projection due in part to the impacts of the war in Ukraine. The World Bank stated that countries in South Asia are grappling with rising commodity prices, supply bottlenecks, and vulnerabilities in financial sectors and that the war in Ukraine will amplify these challenges, further contributing to inflation and deteriorating current account balances.
The Maldives development update published by the World Bank underscores the growing momentum of the economy supported by a sustained recovery in tourism while identifying potential downside risks to growth. The Maldives is expected to see strong economic growth in the medium-term, with real GDP expected to grow by 10.2% in 2023.
Country Director for the Maldives, Nepal, and Sri Lanka of the World Bank Faris H. Hadad-Zervos said prudent debt management remains critical to improving fiscal sustainability, as the strong rebound in tourism is expected to boost Maldivian economic recovery, with real GDP growth projected to return to pre-pandemic levels by 2023. He said a high dependence on tourism and limited sectoral diversification also remains a key structural challenge but that the World Bank will continue to support the Maldives in leveraging digital technologies and investing in renewables to achieve a green, resilient, and inclusive development path.