Transport and communication businesses recorded another quarter of growth at the start of 2026, but rising operating costs, supply chain disruption and tighter access to credit have led firms to anticipate a steep deterioration in activity during the second quarter.
The Maldives Monetary Authority’s Quarterly Business Survey showed that the sector expanded for a third consecutive quarter between January and March. The total revenue index rose by 17 points to 73, while the demand index remained high at 91 despite a marginal decline from the previous quarter.
Employment also strengthened considerably. The number of employees index increased by 63 points to 77, with no surveyed business reporting a reduction in staffing. Labour expenses rose alongside hiring, as the index for wages and other labour costs per employee climbed by 54 points to 95.
The expansion was accompanied by a sharp increase in operating expenses. The input prices index rose by 60 points to 79, with 80 per cent of businesses reporting higher costs. Prices charged to customers also increased, although at a more moderate rate, with the average price index rising by 18 points to 34.
Businesses expect cost pressure to intensify over the course of the year. Transport and communication firms forecast input prices, excluding wages, to rise by 29 per cent in 2026, compared with a 14 per cent increase in 2025. Selling prices are expected to increase by 21 per cent, while wages are projected to rise by 12 per cent.
Oil and energy prices were identified as the largest contributor to higher business costs, followed by freight and shipping expenses and exchange rate pressures. However, half of the respondents said they were not passing higher costs on to customers, while a further quarter said only part of the increase was being transferred.
Supply chain disruption has also placed substantial pressure on the sector. The survey found that 81 per cent of transport and communication businesses had been severely affected by disruptions associated with the closure of the Strait of Hormuz. A further 13 per cent reported a moderate or mild impact.
Despite the strong first-quarter performance, expectations for the second quarter weakened considerably. The expected revenue index fell by 114 points to negative 94, with 96 per cent of businesses forecasting lower revenue. The expected demand index dropped by 102 points to negative 52.
The sector’s financial outlook also deteriorated. The expected financial situation index declined to negative 77, while the expected overall business situation index fell to negative 71. Access to credit is expected to become more restrictive, with the related index declining to negative 78 and 78 per cent of respondents anticipating tighter conditions.
Businesses nevertheless expect employment to continue increasing, with the expected employee index rising to 69. Capital expenditure expectations also remained positive, suggesting that companies may continue investing despite concerns over near-term revenue and demand.
The findings point to a widening gap between the sector’s recent operating performance and its expectations for the months ahead. While demand and revenue remained strong during the first quarter, firms appear to be preparing for weaker activity as external disruptions, higher energy and freight expenses, and limited financing place greater strain on operations.
