Tourist demand for guesthouses over resorts hampers Maldives' GDP growth
Maldivian tourism activity declined by 5% in the third quarter of last year; this is the second consecutive quarter of such a slowdown.
By
Ahmed Mizyal
The World Bank has lowered the country's productivity growth forecast for the current fiscal year as the country's tourism industry is turning from resorts to guesthouses.
According to the World Bank's South Asia Development Update report, the country's GDP growth for the current fiscal year is expected to be 4.7%. This is 0.5% lower than previously estimated by the World Bank.
The World Bank has lowered its forecast for Maldives's real GDP growth due to the changing tourism industry, the report said. The World Bank report noted that many tourists are now coming to cheap guesthouses instead of expensive resorts.
That figure is expected to be 5.2% in 2025. However, that is if the Velana International Airport development project is completed on time.
The World Bank report predicts that the current account deficit will reach 20% of GDP and the fiscal deficit will reach double digits next year.
In addition, the World Bank has expressed concern about the high debt to GDP ratio and the challenges of repaying foreign debt.
According to the report:
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The economy grew by 2% in the third quarter of last year (compared to the third quarter of 2022).
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Maldives' tourism activity declined by 5% in the third quarter of last year; this is the second consecutive quarter of such a slowdown
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The slowdown is also due to the increase in the number of tourists going to cheap guesthouses instead of expensive resorts
