Growth picked up in 2013 owing to a strong recovery in tourism, mainly a further large influx of visitors from Asia. The country still has to grapple with hefty fiscal and external imbalances despite some improvement. With strengthening in global economic conditions, the outlook is for higher growth. Policy nevertheless needs to focus on durable reductions to the fiscal deficit.
After a deep downdraft in 2012, growth in gross domestic product (GDP) picked up to an estimated 3.7% in 2013, buoyed by a strong rebound in tourism and associated sectors, such as transport and communication. Tourism, the mainstay of this island economy, expanded by an estimated 5.5% and accounted for about 40% of growth. Transport performed robustly, expanding by 5.1%, as did communication at 7.6%. Together, the three sectors provided three-quarters of GDP growth. Industry, which is dominated by construction, has stalled in the past 2 years on weak investment, as hotel occupancy has not recovered to rates enjoyed before the financial crisis.
|Selected Economic Indicators (%) - Maldives||2014||2015|
|Current Account Balance (share of GDP)||-21.8||-22.1|
Source: ADB estimates.
Tourism remains the major driver of the economy. Favorable global economic prospects - particularly in the euro area and the PRC - are expected to increase tourist arrivals and have a positive spillover into the rest of the economy. Following the election of the new President in November 2013, after nearly 2 years of political turmoil, greater stability is expected to prevail, bolstering a favorable outlook. The new government is expected to take steps to advance economic activity, including implementing plans to ensure that the Maldives maintains its high-end position in the world tourism market. Economic growth is projected to pick up moderately to 4.5% in 2014 and further to 5.4% in 2015.
Source: ADB. 2014. Asian Development Outlook 2014. Manila.