The real gross domestic product (GDP) is projected to grow by 13.5% next year, according to a report released by Maldives Monetary Authority (MMA). This is despite staggering declines in real GDP in 2020, mainly attributed to pandemic-induced recessionary effects that halted our economy.
The ‘Economic Update December 2020’ report by MMA shows that in 2020, real GDP is projected to decline severely by 29.3% according to the moderate case growth forecast scenario. This is underpinned by a sharp decline in tourism sector and related sectors such as wholesale and retail trade; construction and real estate; as well as transport and communication.
Furthermore, according to the advance estimate of the Quarterly National Accounts for Q2-2020 released by the National Bureau of Statistics, real GDP declined significantly by 51.6% in Q2-2020, when compared with the same quarter a year ago. This was a deeper plunge when compared with the revised growth rate of -5.0% for Q1-2020 (previously at -5.9%).
The marked decline in growth during Q2-2020 reflected the adverse effects of spread of the COVID-19 pandemic on the local economy. Particularly, the government imposed a full lockdown in the Greater Male’ area for a large part of the quarter, while the international border remained temporarily closed from 27 March 2020.
However, going forward, the MMA report reveals that the projected growth in real GDP for 2021 is 13.5%, hinting at economic recovery in the coming days.