Maldives growth to decline by 1% this year, says ADB
The report stated that inflation in the Maldives is expected to rise by 5%, driven by fuel prices and the cost of foreign currency.
The Asian Development Bank has forecast that economic growth in the Maldives will decline by 1% this year, citing the impact of the Middle East conflict.
In its Asian Development Outlook, the bank stated that the Maldivian economy recorded growth last year following increases in tourism and fisheries. However, growth is expected to slow this year due to disruptions linked to the conflict, including impacts on tourism, higher fuel prices, and a projected decline in the fisheries sector.
The report stated that inflation in the Maldives is expected to rise by 5%, driven by fuel prices and the cost of foreign currency.
The ADB projected that economic growth could reach 3% next year if conditions in the Middle East stabilise and fuel prices decline. Inflation is projected at 4% for the same period.
The report noted that the conflict will place pressure on fiscal sustainability and affect the economic outlook. It stated that expenditure on fuel subsidies could increase to USD 110 million due to higher global oil prices.
Revenue from the tourism sector is projected to decline by USD 65 million, while total state revenue is expected to be 6.7% lower than initial budget estimates.
The ADB stated that raising additional loans to respond to current conditions and increasing the budget deficit would present challenges. It noted that the government may need to implement expenditure measures to manage the deficit.
The report added that if the deficit remains elevated and foreign currency reserves are not strengthened while the conflict continues, the Maldives could face economic risks.
