Economic Outline

flag Maldives Maldives: Economic Outline

Economic Indicators

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. Economy growth stood at 7% in 2019 with the completion of large infrastructure projects and the slow transition to new ones. According to the updated IMF forecasts (2022), due to the outbreak of the COVID-19, GDP growth fell by -32% in 2020, picked up to 18.9% in 2021 and should reach 13.2% in 2022, subject to the post-pandemic global economic recovery.

The country was a leading destination for high-end tourism, which should continue to be the main driver of growth when borders will reopen worldwide. Restoration of tourist arrivals and overall GDP to pre-pandemic levels is expected for early 2023 (Coface, 2022). Other important services sectors, such as retail and transport, will follow the pace of tourism. Recent infrastructure investment helped relieve supply bottlenecks in the sector. Growth was also sustained by an expansive fiscal policy. The Maldives experiences chronic budget deficits partly due to imports for infrastructure development, an indicator that plummeted due to the COVID pandemic: the government faced an overall budget deficit of 6.6% of GDP in 2019, which increased to 22.7% in 2020 and 18.1% in 2021 (COFACE, 2022). Over the medium term, public debt, which was equal to 78% of GDP in 2019, has increased to 146% in 2020 and 137.2% in 2021. It is forecasted to reach 133.3% in 2022 and 128.2% in 2023 (IMF, 2022). According to the latest World Economic Outlook of the IMF (2022), the rate of inflation was negative by 1.6% in 2020, and increased to 1.4% in 2021. It should reach 2.3% in 2022. External risks stem from trade tensions and policy uncertainty, and slower growth in advanced economies and China as well as border closures are impacting negatively tourism and undermine the weak external position. 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. Following his victory in 2018 presidential elections, Ibrahim Mohamed Solin has pledged to restore democratic institutions and the freedom of the press, re-establish the justice system, and protect fundamental human rights. 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.

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. However, the new administration seeks a diplomatic pivot towards India, manifested in a USD 400 million loan to finance various infrastructure projects. The signing of a military agreement with the U.S., which announced plans to open an embassy, signals a trend of geopolitical rapprochement with the West (Coface, 2022).

In the current context, the Maldives remains a relatively prosperous country of  South Asia in terms of GDP per capita (USD 12,464 in 2020 from USD 9 889 in 2021, Coface data), and its unemployment rate remains relatively low at 6.4% in 2020 from 6.1% in 2019 (Department of National Planning, Republic of Maldives, 2022). However, poverty remains as a serious problem, with 15% of the population living below the national poverty line and infrastructure remains insufficiently developed. 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 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 5.633.74e4.575.306.05
GDP (Constant Prices, Annual % Change) 7.0-32.0e18.913.212.1
GDP per Capita (USD) 15,1499,88911,89913,55115,223
General Government Gross Debt (in % of GDP) 78.3146.0137.2133.3128.2
Inflation Rate (%) 1.3-1.6e1.42.31.9
Current Account (billions USD) -1.49-1.12-0.73-0.74-0.54
Current Account (in % of GDP) -26.5-29.9-15.9-13.9-8.9

Source: IMF – World Economic Outlook Database - October 2021.

Note: (e) Estimated Data


 
Monetary Indicators 20162017201820192020
Maldives Rufiyaa (MVR) - Average Annual Exchange Rate For 1 MUR 0.430.450.450.430.39

Source: World Bank - Latest available data.

 

Main Sectors of Industry

 
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) 5.2 11.7 70.0
Value Added (Annual % Change) 6.4 -21.3 -32.7

Source: World Bank - Latest available data.

 

The Active Population in Figures

201820192020
Labour Force 285,624297,757294,396

Source: International Labour Organization, ILOSTAT database

 
201720182019
Total activity rate 70.75%71.53%72.12%
Men activity rate 84.82%85.68%86.59%
Women activity rate 44.61%43.97%43.05%

Source: International Labour Organization, ILOSTAT database

 

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Indicator of Economic Freedom

Definition:

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.

Score:
55,2/100
World Rank:
136
Regional Rank:
31

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

See the country risk analysis provided by Coface.

 

Indicator of Political Freedom

Definition:

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.

Ranking:
Partly Free
Political Freedom:
4/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

Indicator of Freedom of the Press

Definition:

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.).

World Rank:
72/180

Source: World Press Freedom Index, Reporters Without Borders

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Sources of General Economic Information

Main Online Newspapers and Portals
Maldives News (SUN)
Maldives Newspapers online
Maldives Newspapers and News Sites
BBC Country Profile, Maldives
Useful Resources
Ministry of Economic Development
Ministry of Finance
Maldives Monetary Authority
 
 

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Latest Update: May 2022