Maldives Monetary Authority (MMA) has revealed that the Maldivian economy made great strides in 2016.
In the annual report for 2016, MMA reported an increase in Gross Domestic Product (GDM) from 8.2% in 2015 to 9.3% in 2016. MMA attributed the economic growth to the strong performance of the tourism and construction sectors. The central bank said that the tourism sector was mainly due to a pick-up in tourist arrivals during the latter part of the year, which ensured that overall growth of the sector remained resilient. The increase in tourist arrivals was rallied by the recovery of European economies, as well as an increase in international flight movements, which was reinforced by the commencement of flights from new destinations.
MMA also attributed its robust growth to large infrastructure projects undertaken by the government, construction and renovation of resorts, and a rapid increase in residential and commercial buildings in Male' and Hulhumale'. MMA noted that the fisheries sector recovered markedly during 2016, with improved primary fishing activity and positive growth of volume of fish exports.
The rate of inflation decelerated further to 0.5% in 2016, from 1.0% in 2015, according to MMA.
The report said that the ease of inflation was mainly due to the passive growth of global commodity prices, particularly global crude oil prices. It said that the decline in domestic fish prices also contributed to the dampening of inflationary pressure in the economy in 2016, which was evidenced by the higher rate of inflation excluding fish prices. The price declines in oil-related categories, such as electricity and transport, further contributed to the downward pressure on inflation.
However, MMA noted that the removal of government subsidies from staple food items during the last quarter put upward pressure on inflation during the latter part of the year.