The Maldives Monetary Authority’s November 2024 Economic Update reveals a tempered economic growth trajectory, with real GDP expanding by 4.5% in the second quarter of 2024 compared to 7.7% in the first quarter. This deceleration was attributed to declines in key sectors, including fisheries, construction, and manufacturing, contrasting with gains in public administration, transportation, tourism, and real estate.
Tourism Drives Growth Despite Operational Challenges
Tourism remains a vital driver, with a 10% year-to-date increase in arrivals through October, largely fuelled by strong performances in European and Chinese markets. However, guesthouses and hotels faced setbacks, with bednights declining by 6% and 41%, respectively, even as resorts experienced modest growth. The sector also saw a slight reduction in operational bed capacity compared to the same period in 2023.
Inflation and Consumer Spending
The inflation rate held steady at 1.1% in October, primarily driven by rising fish and vegetable prices. A slight monthly decline in consumer prices reflected varied shifts in essential goods and services.
Public Finance and Debt Dynamics
The report highlights an increase in government revenue by 20% year-on-year in March 2024, primarily from higher tax revenue, although non-tax revenue decreased. Expenditure rose modestly by 3%, with recurrent spending outpacing capital investments. Government debt as a percentage of GDP fell from 103% at the end of 2023 to 98% in Q1-2024, despite a marginal uptick in total debt, driven by domestic borrowing.
Mixed Trade Performance and Reserves Recovery
Exports in October 2024 fell by 29% year-on-year, largely due to reduced earnings from tuna and re-export categories. Imports grew by 2%, driven by transport equipment and food items, while construction materials and petroleum imports declined. However, gross international reserves surged to USD 614.6 million by the end of October, marking a 66% rise from September, bolstered by a currency swap with India’s Reserve Bank.
Private Sector Credit and Monetary Developments
Private sector credit expanded by 11%, led by growth in personal loans and tourism-related credit. However, monetary metrics revealed declines in reserve and broad money due to foreign liabilities and shifts in domestic asset allocations.
The update underscores the Maldives’ resilience in navigating economic complexities while highlighting areas for policy intervention to sustain balanced growth.
