The World Bank has released its South Asia Development Update, titled "Jobs for Resilience," forecasting a 4.7% growth for the Maldives' economy this year. This figure is slightly lower than the bank's previous estimate, primarily due to an anticipated shift in tourism spending patterns, with more tourists opting for guest houses over luxury resorts.
However, the World Bank projects a rebound in economic growth to 5.2% next year, driven by the development of the Velana International Airport (VIA). Despite this growth, the report warns that state debt is also expected to rise during the same period.
Last year, the Maldivian economy grew by a modest 2%, significantly slower than the anticipated 13.9% growth in 2022.
The report underscores the crucial role of private enterprise in fostering economic vibrancy and job creation. However, it notes a slowdown in private sector activity.
Moreover, the World Bank report highlights challenges within Maldives' financial sector, citing its relatively lower competitiveness compared to neighboring countries. It points out the significant role played by government-owned banks in the economy, alongside comparatively higher interest rates.
In a broader context, the report positions South Asia as one of the fastest-growing regions globally, with a projected growth rate of 6.1% next year. While India leads this growth trajectory, other countries in the region are also experiencing accelerated economic expansion, according to the World Bank.