The Maldives Monetary Authority’s latest Quarterly Economic Bulletin shows that the domestic economy continued to grow in the second quarter of 2025, supported by robust activity in tourism, construction, and real estate. The national inflation rate decelerated to 4.6% from 5.3% in the first quarter, reflecting falling energy prices and moderating food costs.
According to the report, real GDP grew by an estimated 2.5% in the first quarter, with early indicators pointing to further improvement in the second quarter. The tourism sector remained the primary growth driver, recording a 16% increase in tourist arrivals compared to the same period last year, bringing total arrivals to nearly half a million for the quarter. By the end of June, the country had already welcomed one million visitors, the fastest pace ever recorded.
Construction and real estate also showed signs of strong expansion, buoyed by an 11% rise in imports of construction-related materials and continued investment in property development. The fisheries sector, which had contracted earlier in the year, rebounded with fish purchases more than doubling during the quarter, largely due to higher skipjack tuna volumes.
The wholesale and retail trade sector, however, recorded mixed results, with imports declining slightly by 1% while credit to the sector rose by 17%. Inflationary pressure eased, primarily due to lower electricity tariffs and fuel prices. The impact of last year’s tax changes, including higher tobacco duties, continued to be reflected in the Consumer Price Index.
On the fiscal front, government revenue rose to MVR 8.9 billion, up by nearly MVR 1.9 billion compared to the same quarter in 2024. This growth was mainly driven by tourism-related taxes, including the increase in the Tourism Goods and Services Tax, green tax, and departure tax. Expenditure, meanwhile, fell to MVR 9.2 billion, driven by reduced capital spending on infrastructure and operational cost cuts.
Broad money supply expanded by 11%, reflecting increased private sector lending and bank investments in government securities. Despite the decline in reserve money, gross international reserves rose to US$832.4 million, a 63% increase year-on-year, partly due to the US$400 million swap arrangement with the Reserve Bank of India.
The banking sector remained well-capitalised with a risk-based capital ratio of 50%, far above the minimum requirement. Profits were steady, with pre-tax earnings totalling MVR 2.2 billion. The insurance industry also recorded healthy growth, with gross written premiums increasing by 15% compared to the same period last year.
Overall, the MMA report paints a picture of steady, broad-based growth tempered by fiscal restraint and moderating inflation. With global trade conditions improving and tourist arrivals remaining strong, the outlook for the rest of 2025 appears cautiously optimistic, though risks remain from external financing pressures and global economic uncertainties.
