The construction industry staged a strong recovery in the second quarter of 2025, ending a year-long period of contraction, according to the Maldives Monetary Authority’s Quarterly Business Survey.
The survey’s “volume of construction activity” index rose by 92 points to 46, meaning a far greater share of businesses reported increased activity compared with those reporting declines. A positive index indicates that more firms are experiencing growth than contraction, and the magnitude of the point increase shows how sharply sentiment has shifted from the previous quarter. Similarly, the “volume of orders received” index climbed 51 points to 27, signalling a notable rise in incoming contracts across the sector.
Employment trends also strengthened, with the “number of employees” index jumping 74 points to 40. This means that significantly more construction firms increased their workforce compared with those that reduced it. Wages and other labour costs per employee also rose, with the respective index up 16 points to 24, suggesting modest upward pressure on pay.
While costs remain elevated, they showed some moderation. The “input prices” index stayed positive at 43, meaning cost increases were still more common than decreases, but the 9-point drop indicates the pace of cost growth has slowed. The “prices charged on average” index, at 14, still shows more firms are raising prices than cutting them, though the 21-point fall suggests less aggressive pricing than before.
Despite the rebound in activity, the “financial situation of the company” index declined by 12 points to -30, meaning more firms saw a deterioration in their financial health than an improvement. Access to credit also remained tight, with a negative index reading of -55, showing that more businesses found borrowing conditions worsening than easing.
Looking ahead to Q3 2025, optimism remains. The expected activity index rose 43 points to 43, while expectations for new orders increased 31 points to 27. Capital expenditure plans turned positive, jumping 59 points to 38. However, the expected financial situation index fell sharply by 46 points to -16, indicating that while firms foresee more work, many expect continued financial strain.
Overall, the sector’s rebound is significant in terms of workload and employment, but sustained recovery may hinge on easing credit conditions and improving profitability.
