Maldives economy stalls; troubles loom
At the beginning of this year, the country had enough money in its reserves to import three months’ worth of supplies.
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By
Ahmed Naaif
The country's economy has remained at the same level as it was in the second quarter of the curren compared to the first quarter of the current fiscal, statistics show.
Maldives's GDP grew by around 25% after the pandemic. However, that growth has slowed somewhat and the economy is expected to grow at 9.4% this year.
Economic growth, or real GDP, stood at 0% in the second quarter of this year, according to the latest economic data released by the MMA on Thursday. That means the economy is being held back from growing any further. The MMA has noted that:
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This is a decrease of 4.4% compared to the first quarter of this year
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Real GDP growth in the first quarter of this year was 5.5%; This is a 1.4% increase compared to the last quarter of 2022
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The main reason for the slowdown in real GDP growth was the impact on tourism revenue
Tourist arrivals rose 4% in October this year, but other measures of tourism, such as tourist spending and occupancy rates, declined, according to MMA data:
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Beds per night declined by 3%
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The occupancy rate has dropped from 58% to 53%
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The number of days spent by tourists in Maldives has decreased from 8.1 to 7.6
In addition to the slowdown in tourism, wholesale and retail businesses also declined in October, the MMA said.
The World Bank's recent report on Maldives has expressed concern that Maldives' economic growth is slowed.
Exports down
The MMA noted that Maldives's exports also declined in the second quarter of this year. The reason cited was the decline in fish exports. Thus:
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Exports declined by 11% compared to last year
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Exports declined due to reduced re-exports such as jet fuel and exports of chilled seafood and fish products
However, imports increased by 17% compared to last year.
Inflation holds steady
Inflation, or the rise in commodity prices, fell in October, according to MMA data. Thus:
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Inflation has been maintained at 2.6%
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Price increases have been reduced from 0.4% to 0.1%
The categories where prices have gone up are:
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Restaurant and cafe prices - 0.40% points
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Fruit - 0.35% points
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Household items - 0.25% points
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Current - 0.24% points
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Dairy products - 0.22% points
Record decline for usable reserves
One of the biggest concerns of economists is that the country's official reserves are falling to an unprecedented level. Thus:
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Official reserves currently stand at USD 552 million
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This is just enough reserve to import goods for only 1.9 months
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At the beginning of this year, the country had enough money in its reserves to import three months’ worth of supplies
The MMA has forecast that Maldives' usable reserves will be very low by the end of this year. That will be about USD 100 million.
So, the government is trying to raise about USD 200 million from abroad for budget support.
