The Maldivian economy recorded a 6.5% real GDP growth in the third quarter of 2024, marking an acceleration from the 4.1% growth observed in the second quarter. According to the latest data from MMA’s Economic Update for February 2025, this expansion was primarily driven by the public administration, transportation and communication sectors, alongside gains in tourism, real estate, wholesale and retail trade, and construction. In contrast, the fisheries sector experienced a notable decline.
GDP Growth and Economic Outlook
The latest estimates project 5.5% GDP growth for 2024, an upward revision from the 4.9% forecasted earlier in the year. The adjustment reflects stronger-than-expected performances in tourism and transportation, following a 4.7% GDP growth in 2023.
Tourism Performance
Tourism arrivals remained strong, with 208,980 tourists visiting the Maldives in December 2024, a 7% increase from the same period in 2023. Total bed nights grew by 3%, driven by an 11% rise in resort stays, which offset a 21% decline in guesthouse occupancy.
For the full year of 2024, total tourist arrivals increased by 9%, while bed nights rose by 3%. The average length of stay between January and September increased slightly to 7.7 days, compared to 7.6 days in 2023.
Inflation and Cost of Living
Inflation, as measured by the Consumer Price Index (CPI), rose to 5.3% in January 2025, up from 4.8% in December 2024. The largest contributors to this increase were tobacco, restaurant and café prices, and fish, with additional upward pressure from fruit, vegetables, dairy, and meat prices.
Government Finances and Debt
Government revenue, excluding grants, increased by MVR 13.9 million (1%) in November 2024 compared to the same period in 2023. This was largely due to an increase in non-tax revenue, which offset a decline in tax collections.
Government expenditure rose by MVR 326.3 million (9%), driven by an MVR 522.1 million increase in capital spending. However, recurrent expenditure fell by MVR 195.7 million in the same period.
Total government debt (excluding guaranteed debt) reached MVR 120 billion by the end of Q3 2024, up 3% from Q2 2024, with debt as a percentage of GDP rising to 111% from 108%. The increase was primarily driven by domestic debt.
Monetary Developments and Foreign Reserves
Reserve money (M0) declined by 11% in January 2025, following a 9% drop in December 2024. This was mainly due to a reduction in net foreign assets, which offset an increase in net domestic assets. The decline in foreign assets was attributed to a US$400 million swap agreement with the Reserve Bank of India in October 2024.
Broad money (M2) grew by 2% in January 2025, following a slight contraction in December 2024. This growth was driven by an increase in time deposits denominated in local currency and savings deposits.
Gross international reserves rose to US$708.1 million at the end of January 2025, reflecting a 5% increase from December 2024 and a 28% increase from January 2024.
Trade and Exports
Total exports declined by 5% in December 2024 compared to the same period in 2023, primarily due to lower earnings from frozen skipjack and yellowfin tuna exports. However, re-exports increased, driven by higher jet fuel re-exports.
Imports, on the other hand, increased by 13%, with higher spending on transport equipment, food, construction materials, and petroleum products. For the full year of 2024, exports declined by 9%, while imports grew by 4%compared to 2023.
Credit to the Private Sector
Private sector credit growth remained stable at 7% in January 2025. The tourism sector continued to receive the largest share of bank credit, though growth was marginal at less than 1%. Personal loans saw the highest growth, increasing by 30%, driven by higher lending for credit cards and consumer durables.
Economic Outlook
The Maldivian economy continues to show resilience, with strong tourism performance and steady GDP growth, though challenges remain in inflationary pressures, rising public debt, and a widening trade deficit. The government’s fiscal strategy and monetary policies will play a critical role in balancing economic growth and financial stability in the coming months.
