The latest Quarterly Business Survey from the Maldives Monetary Authority (MMA) reveals a mixed picture of economic activity during the first quarter of 2025, with signs of weakness emerging across several key sectors despite some pockets of resilience.
The survey shows that while the wholesale and retail trade sector recorded continued growth, other sectors, particularly construction and transportation, faced headwinds. The tourism sector, although still expanding during the first quarter, has reported a sharp deterioration in outlook for the second quarter as the high season comes to a close.
According to the MMA, the tourism sector experienced slower growth in revenue and bookings compared to the previous quarter. Despite relatively strong figures during Q1, businesses in the sector expect a significant downturn in Q2. Key indices related to future bookings, revenue, and room rates turned sharply negative, reflecting seasonal trends and growing caution over near-term demand. The financial outlook for tourism also took a negative turn, with expectations for profitability and overall business sentiment deteriorating.
Meanwhile, the construction sector continued its downward trajectory, marking the fourth consecutive quarter of contraction. Business sentiment remains subdued, with declining employment, weak order books, and high input prices. The only relative bright spot for the sector was a modest improvement in access to credit and a slight uptick in future hiring expectations. However, overall confidence remains fragile.
In contrast, the wholesale and retail trade sector posted a strong performance in Q1, maintaining momentum in sales and supplier orders. Business sentiment improved markedly, supported by gains in financial position and overall outlook. However, expectations for Q2 are less optimistic. Anticipated declines in sales volume and selling prices, along with tighter credit conditions, suggest that the pace of growth may not be sustained in the coming months.
The transportation and communication sector also reflected a mixed outlook. Revenue fell in Q1, and sentiment around profitability and business conditions declined sharply. Despite this, businesses remained optimistic about improvements in their financial situation and capital expenditure in the next quarter. Rising wage costs and input prices, however, could continue to pressure margins.
The survey highlights broader concerns about inflationary pressures and financial stability. Input prices remained elevated in most sectors, with construction and transportation businesses anticipating further increases. At the same time, access to credit worsened across the board, with only the construction sector expecting conditions to remain tight rather than deteriorate further.
Taken together, the Q1-2025 survey suggests that while the economy is not in immediate distress, the momentum observed in some sectors may be losing steam. The divergence in performance across industries, alongside falling expectations and rising cost pressures, signals a potentially cautious period ahead for Maldivian businesses.
