The Maldivian economy experienced mixed outcomes during the fourth quarter of 2024, marked by robust growth in the tourism sector despite a significant downturn in fisheries and heightened inflation, according to the Maldives Monetary Authority’s (MMA) Quarterly Economic Bulletin.
Real GDP growth for the quarter was primarily driven by the thriving tourism industry, construction and real estate, and wholesale and retail trade. Tourist arrivals increased by 7% year-on-year, totalling 554,588, primarily driven by robust growth from key European markets, notably Russia and the United Kingdom. Russia reclaimed its position as the largest tourist market, accounting for 11% of arrivals, followed closely by the UK (10%) and Germany (9%).
However, the fisheries sector suffered a substantial setback, with fish purchases by local processing companies plunging by 52% compared to the same period in 2023. This downturn, largely attributed to a 58% reduction in skipjack tuna purchases, significantly impacted domestic exports, which declined by 50%.
Inflation notably accelerated to 3.3%, up from 1.3% in the previous quarter, mainly driven by increased import duties, especially on tobacco products, and higher costs associated with restaurants and cafés. Food prices remained a significant contributor, with fish, vegetables, and fruits experiencing notable price increases.
Financial sector indicators remained stable, with banks reporting solid profitability and robust capital adequacy ratios. Bank profitability rose by 5% year-on-year, reflecting increased net interest income. The insurance sector also performed strongly, driven by growth in health and aviation insurance segments, improving overall profitability despite higher claims.
Despite these positive indicators, the country’s merchandise trade deficit widened slightly to USD 867.6 million, primarily due to declining exports and marginal growth in imports. The overall merchandise exports dropped by 19%, significantly impacted by the decreased export of frozen skipjack tuna.
Looking ahead, the MMA forecasts a narrowing of the current account deficit and an acceleration in economic growth in 2025 to 6.4%, supported by continued recovery and expansion in the tourism, construction, and real estate sectors. Nonetheless, potential risks remain, including geopolitical tensions affecting tourism, implementation delays in infrastructure projects, and uncertainties surrounding planned subsidy reforms, all of which could further impact inflation and economic stability.
