Construction activity in the Maldives showed a clear rebound in the final quarter of 2025, with firms reporting higher output, improving business sentiment and a turnaround in financial conditions, according to the latest Quarterly Business Survey (QBS) published by the Maldives Monetary Authority.
Survey results indicate that the volume of construction activity expanded further in the fourth quarter, with half of responding firms reporting an increase compared to the previous quarter. The index tracking construction activity rose sharply, signalling a broad-based pickup in on-site work after a subdued period earlier in the year. Orders received by construction firms also increased, suggesting that the recovery was supported by an improving project pipeline rather than short-term fluctuations.
Labour conditions in the sector remained positive, with employment levels continuing to rise during the quarter. At the same time, wage and labour cost pressures eased slightly, even as staffing numbers increased. This points to firms expanding capacity while attempting to manage costs in an environment where margins remain sensitive.
Cost pressures, however, remain a defining feature of the sector. Input prices edged higher during the quarter, and prices charged by construction firms moved back into positive territory after previous declines. The QBS also highlights persistent structural constraints facing the sector, including high material costs, foreign exchange pressures and delays in client payments, all of which continue to shape firms’ operating decisions.
A notable shift in the fourth quarter was the improvement in business sentiment. Both the overall business situation and the financial situation indices for construction turned positive after remaining negative for two consecutive quarters. This suggests that cash flow conditions and balance sheet expectations have stabilised, even as access to credit remains tight across most non-tourism sectors.
Looking ahead, construction firms remain cautiously optimistic about activity levels in the first quarter of 2026. Expectations for construction output and new orders remain positive, although the pace of employment growth is expected to slow. Firms anticipate further increases in input costs, alongside a gradual rise in capital spending, indicating preparation for sustained but cost-sensitive growth.
Taken together, the QBS results point to a construction sector that is no longer contracting, but is entering a phase of measured recovery. While activity and confidence have improved, the outlook remains shaped by financing constraints and cost dynamics, suggesting that the sector’s expansion is likely to be steady rather than rapid.
