For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.
The Maldives has been a development success until 2020, enjoying robust growth coupled with considerable development of infrastructures and connectivity. After suffering a significant economic downturn caused by the pandemic, the Maldives has experienced a remarkable recovery, thanks to the government's effective policy measures. With the resumption of tourism activities, the country's real GDP growth rebounded strongly, surging from a record-low contraction of 33.5% in 2020 to a robust expansion of 37% in 2021. In 2022, the IMF estimated the country’s growth at 10.5% thanks to buoyant tourism activity and associated spillovers to related sectors such as transportation and trade. GDP is forecast to continue growing this year and the next, although at a slower pace (6.6% in 2023 and 5.7% in 2024 – IMF).
The Maldives experiences chronic budget deficits partly due to imports for infrastructure development, an indicator that plummeted due to the COVID pandemic. In 2022, the double-digit fiscal deficit persisted (14.3% of GDP) due to heightened capital expenditure, a rise in interest payments, and an increase in wage expenses. Although the banking system remains stable, bolstered by robust reserves, potential hazards arise from the connection between the government and the banking sector. Moreover, sustained aid to State-Owned Enterprises (SOEs) amplified the vulnerabilities of the fiscal situation. In fact, The Maldives is still exposed to a significant risk of external debt distress and an overall high risk of debt distress. Although the total public and publicly guaranteed (PPG) debt-to-GDP ratio has decreased from its pandemic peak of 154% of GDP in 2020 to 122.6% in 2022 thanks to the economic rebound, it is anticipated to remain elevated in the medium term (around 117% in 2023-24). As external financing requirements are predicted to increase, it will add pressure on the already limited reserve buffers, heightening the possibility of debt rollover hazards. China has established its influence through a free trade agreement and significant infrastructure investments (over USD 1.2 billion) under the Maritime Silk Roads project. Moreover, loans from China make up 45% of the country’s national debt. Inflation has risen but is contained due to price subsidies (3.9% in 2022) and is projected to increase further, reaching 4.9% in 2023, reflecting the persistence of high costs of energy and food, spending pressures for the 2023 elections, and the one-off impact of the planned goods and services tax hikes in 2023 (IMF). Diversifying the economy beyond tourism and fishing, reforming public finance, increasing employment opportunities, and combating corruption, cronyism, and a growing drug problem are near-term challenges facing the government. Furthermore, considering that 80% of its territory is less than one meter above sea level, the government is worried in the long term about the impact of erosion and global warming on the low-lying country.
In the current context, the Maldives remains a relatively prosperous country in South Asia in terms of GDP per capita (USD 36,358 PPP in 2022 - IMF), and its unemployment rate remains relatively low (at 6.4% in 2021 according to the World Bank, latest data available). However, poverty remains a serious problem, with 15% of the population living below the national poverty line and insufficiently developed infrastructure. The population is largely dependent on state aid (subsidies, social benefits), thus the recent fiscal consolidation measures could also lead to increased social tensions.
|Main Indicators||2020||2021||2022 (E)||2023 (E)||2024 (E)|
|GDP (billions USD)||3.74||5.39||6.21||7.00||7.61|
|GDP (Constant Prices, Annual % Change)||-33.4||41.7||12.3||7.2||5.7|
|GDP per Capita (USD)||9,883||14,013||15,883||17,627||18,843|
|General Government Gross Debt (in % of GDP)||154.4||120.1||114.9||108.9||108.0|
|Inflation Rate (%)||-1.6||0.2||2.6||5.2||2.8|
|Current Account (billions USD)||-1.33||-0.43||-1.12||-1.12||-1.08|
|Current Account (in % of GDP)||-35.5||-7.9||-18.1||-16.0||-14.2|
Source: IMF – World Economic Outlook Database , Latest available data
Note: (e) Estimated Data
The agricultural sector accounts for 5.3% of GDP and around 8% of total employment (World Bank, latest data available). The agricultural sector of Maldives is based primarily on coconuts and other tree crops with only around 4,000 hectares under other agriculture crops (FAO). Most of the agricultural produce from the islands is used for local consumption in the islands and atolls. Fishing is the second-largest industry in the Maldives after tourism: more than 20% of the labour force of the Maldives is employed in the fisheries sector and fish and fisheries products account for more than 98% of the physical exports from the country by quantity and value.
The industry sector is relatively small, contributing 8.9% of GDP and 19% of employment. The traditional industries consist of boat building and handicrafts, while the fish-processing industry is the most important. Overall, the manufacturing sector is estimated to account for only 2% of GDP.
The economy of the Maldives is based on services: overall, the tertiary sector accounts for around 73% of both total GDP and employment. Tourism and related services directly contribute to 40% of the economy, 80% of exports and 60% of exchange reserves. According to the latest data by the Maldives Inland Revenue Authority (MIRA), tourism trade turnover reached USD 3.9 billion between Jan-Nov 2022, up from USD 2.4 billion in the same period one year earlier. Maldives registered 1.49 million tourist arrivals by the end of November 2022, close to the level recorded before the pandemic.
|Breakdown of Economic Activity By Sector||Agriculture||Industry||Services|
|Employment By Sector (in % of Total Employment)||8.3||19.1||72.6|
|Value Added (in % of GDP)||5.3||8.9||73.2|
|Value Added (Annual % Change)||-0.6||4.5||46.8|
Source: World Bank - Latest available data.
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|Maldives Rufiyaa (MVR) - Average Annual Exchange Rate For 1 MUR||0.43||0.45||0.45||0.43||0.39|
Source: World Bank - Latest available data.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
The Maldives, which is composed of 1,200 islands, depends heavily on trade, which represents around 143% of the GDP (World Bank, latest data available). The state budget relies primarily on revenues from import duties; therefore, tariffs are relatively high (the average applied tariff rate is 11.7% according to the World Bank). However, as part of its trade policy, the government has removed quotas for the majority of products, and customs procedures have been simplified (obtaining an import licence is almost automatic). The State Trading Organisation (STO) remains the country's largest importer, but the government is seeking to include more private partners. Fish products account for almost the entirety of Maldivian exports (93.2% in 2021), while imports are led by hydrocarbons (17.8%), machinery (10.5%), and electrical machinery (8.6% - data ITC).
Thailand is the major destination for exports (46.3% in 2021), followed by Germany (11.5%), the UK (6.9%), France (4.1%), and India (3.9%). For what concerns imports, China (13.3%), Oman (13.1%), the United Arab Emirates (12.6%), India (12.2%), and Singapore (9.5%) are the major countries of origin in 2021 (data ITC). The State Trading Organisation (STO) remains the country's largest importer, but the government is seeking to include more private partners.
The country possesses few raw materials and, as such, relies heavily on imported oil and finished products. As a result, the Maldives imports much more than it exports, which creates a structural trade deficit. According to WTO, in 2021, the Maldives exported USD 285 million worth of goods and imported USD 2.5 billion. Nevertheless, the country is a net service exporter (thanks to tourism): in 2021, exports of services totalled USD 3.6 billion against USD 1 billion in imports. Therefore, the World Bank estimated the trade balance to be positive by 7.5% of GDP in 2021 (compared to a deficit of 18.9% one year earlier, when COVID-19-related restrictions caused a drop in tourism revenues).
|Foreign Trade Indicators||2017||2018||2019||2020||2021|
|Imports of Goods (million USD)||2,360||2,960||2,888||1,839||2,574|
|Exports of Goods (million USD)||318||339||361||286||285|
|Imports of Services (million USD)||1,279||1,328||1,326||707||1,109|
|Exports of Services (million USD)||2,964||3,237||3,373||1,513||3,665|
|Imports of Goods and Services (Annual % Change)||8.2||12.8||-0.3||-41.1||35.2|
|Exports of Goods and Services (Annual % Change)||7.4||10.5||6.7||-51.4||89.5|
|Imports of Goods and Services (in % of GDP)||79.3||83.7||78.4||68.4||67.8|
|Exports of Goods and Services (in % of GDP)||72.3||70.1||69.4||49.4||75.3|
|Trade Balance (million USD)||-1,908||-2,425||-2,392||-1,451||-2,107|
|Trade Balance (Including Service) (million USD)||-182||-518||-348||-662||449|
|Foreign Trade (in % of GDP)||151.6||153.8||147.9||117.8||143.1|
Source: WTO – World Trade Organisation ; World Bank , Latest Available Data
(% of Exports)
|See More Countries||27.4%|
(% of Imports)
|United Arab Emirates||13.0%|
|See More Countries||38.8%|
Source: Comtrade, Latest Available Data
|0.2 bn USD of products exported in 2021|
|Frozen fish (excl. fish fillets and other fish...Frozen fish (excl. fish fillets and other fish meat of heading 0304)||52.1%|
|Prepared or preserved fish; caviar and caviar...Prepared or preserved fish; caviar and caviar substitutes prepared from fish eggs||21.3%|
|Fish fillets and other fish meat, whether or not...Fish fillets and other fish meat, whether or not minced, fresh, chilled or frozen||11.9%|
|Fish, fresh or chilled (excl. fish fillets and...Fish, fresh or chilled (excl. fish fillets and other fish meat of heading 0304)||4.4%|
|Ferrous waste and scrap; remelting scrap ingots of...Ferrous waste and scrap; remelting scrap ingots of iron or steel (excl. slag, scale and other waste from the production of iron or steel; radioactive waste and scrap; fragments of pigs, blocks or other primary forms of pig iron or spiegeleisen)||3.5%|
|See More Products||6.8%|
|2.6 bn USD of products imported in 2021|
|Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals||17.1%|
|Telephone sets, incl. telephones for cellular...Telephone sets, incl. telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, incl. apparatus for communication in a wired or wireless network [such as a local or wide area network]; parts thereof (excl. than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528)||2.3%|
|Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses "incl. those in the form of transdermal administration" or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006)||1.6%|
|Parts of aircraft and spacecraft of heading 8801...Parts of aircraft and spacecraft of heading 8801 or 8802, n.e.s.||1.4%|
|Insulated "incl. enamelled or anodised" wire,...Insulated "incl. enamelled or anodised" wire, cable "incl. coaxial cable" and other insulated electric conductors, whether or not fitted with connectors; optical fibre cables, made up of individually sheathed fibres, whether or not assembled with electric conductors or fitted with connectors||1.3%|
|See More Products||76.3%|
Source: Comtrade, Latest Available Data
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The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
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Latest Update: September 2023