GDP of the Maldivian Economy Declines to a Great Extent

Real Gross Domestic Product (GDP) of the Maldives has declined to -17.7% compared to 5.9% in 2019.

According to the statistics of Maldives Monetary Authority (MMA), with the dislocation of demand and supply, global trade further declined in Q2 2020 with a downturn of -3.5 in Q1 2020. The economic activities in the Maldives had a major negative impact in Q2 2020 especially the tourism industry with pandemic-led border closures, lock down and travel restrictions worldwide. Tourism sector directly accounts for over 25% of the Maldivian economy and 81% of export earnings which was hardest hit by COVID-19.

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The tourism indicators indicate that total tourist arrivals decreased from 995,000 in January to July 2019 to 385,000 in the same period in 2020 which is a 61.3% decline which also decreased tourist bed nights by 55.6%. This is mainly impacted by the travel restrictions which decreased the number of arrival flights by 52.9% where over 80% tourists are from Europe and Asia.

The statistics further reflect that the inflation rate has rose to from -4.5% in June to -1.1% in July having a major rise in food and beverages from 1.2% in June to 3.5% in July. In addition, inflation of fish increased from -0.3% in June to 3.5% in July along with housing, water, electricity and gas which rose by 10.1% in July 2020.

During the pandemic, the government has taken several measures for pandemic containment and economic recovery such as expenditure on mitigation and containment of COVID-19, economic relief for individuals, households, and business enterprises. Moreover, with the opening of the border and ease on travel restrictions, the economy may recover from the economic downturn.

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