The Maldives economy recorded modest growth in the first quarter of 2025, while key sectors such as tourism and construction showed mixed signals through mid-year, according to the latest Economic Update released by the Maldives Monetary Authority (MMA).
Advance estimates by the Maldives Bureau of Statistics revealed that real GDP expanded by 2.5 percent in Q1 2025, compared to the same quarter of 2024. This was an improvement from the 1.9 percent growth seen in the final quarter of last year. The gains were driven mainly by public administration and construction, with tourism and retail also making positive contributions, though fisheries and transportation lagged.
Forecasts published earlier in May projected full-year growth at 4.5 percent under the baseline scenario, or 5.6 percent under an alternative scenario. Both are lower than the October 2024 projections. The downward revisions followed weaker-than-expected performance in 2024, when the economy expanded by 3.3 percent, significantly below the previous estimate of 5.5 percent.
Tourism, the mainstay of the economy, continued to support growth. Arrivals in July 2025 reached 186,738, up 11 percent from a year earlier, with China, Russia, the UK, Germany, and India leading as key markets. Bednights rose by 9 percent during the month, with guesthouses seeing a notable 55 percent increase, offsetting the slower growth in resorts. However, average stays shortened to 6.9 days between January and July, compared with 7.6 days in 2024, highlighting a shift in visitor patterns.
Inflation held steady at 4 percent in July, with tobacco and food categories accounting for much of the upward pressure, while electricity costs had a deflationary effect.
Public finance data indicated stronger revenues, up 21 percent in June compared with a year earlier, supported by both tax and non-tax income. Expenditure fell by 3 percent, mainly due to reduced recurrent spending. Meanwhile, government debt stood at MVR 125.3 billion at the end of Q1 2025, equivalent to 104 percent of GDP, down from 114 percent in late 2024.
On the monetary front, reserve money declined by 2 percent in July, reflecting lower net foreign assets despite growth in domestic assets. Broad money grew by 13 percent, driven by deposits and higher bank lending. Credit to the private sector remained stable at 6 percent annual growth, with personal loans expanding by 23 percent, while lending to the tourism sector saw a marginal decline.
External trade registered contrasting trends. Exports surged 27 percent in July, buoyed by higher earnings from frozen skipjack tuna, while imports rose only slightly. From January to July, exports were up 14 percent while imports contracted by 1 percent. Gross international reserves, though lower than in June at USD 774.5 million, were nearly double the level recorded in July 2024.
Overall, the data show a gradual but uneven economic recovery, with tourism arrivals growing strongly yet weighed down by shorter stays, and public finances improving despite the heavy debt load. The MMA’s projections suggest that growth in 2025 will remain steady but subdued compared to earlier expectations, underscoring the importance of careful fiscal management and diversification efforts.
