The World Bank has stated that the Maldives is expected to remain the fastest-growing economy in the South Asia region.
In the Global Economic Prospects report for January 2023, the World Bank stated that growth in the Maldives is expected to moderate to 8.2% in 2023, which is below previous projections, as the post-pandemic boost fades. Nonetheless, the Maldives is expected to remain the fastest-growing economy in the region, benefiting from an increase in tourist arrivals and infrastructure investments.
In the report, the World Bank highlighted that tourism in the Maldives rebounded robustly in 2022, returning its gross domestic product (GDP) to its pre-pandemic level more quickly than previously expected. The growth of the tourism industry is expected to be 12.4% in 2023.
Additionally, the World Bank stated that the growth in the South Asia region is projected to slow to 5.5% in 2023 on slowing external demand and tightening financial conditions before picking up slightly to 5.8% in 2024. The pace reflects still robust growth in India, the Maldives, and Nepal offsetting the effects of the floods in Pakistan and the economic and political crises in Afghanistan and Sri Lanka.
Furthermore, the World Bank stated that risks to the outlook remain predominantly to the downside, including those related to the repercussions of the invasion of Ukraine, tightening global financing conditions, legacies from the pandemic, and country-specific vulnerabilities of several regional economies. Other downside risks include a deeper-than-projected global economic slowdown, a more persistent period of elevated inflation, and financial sector stress. The additional deceleration in growth in China, Europe, and the United States (US) would undermine exports as well as the tourism earnings of South Asia’s tourism-dependent economies such as the Maldives.