GDP on the rise: World Bank forecast for Maldives
World Bank recently estimated an 8.5 percent growth of Maldives Real GDP in 2022.
Source: Velana International Airport
The Maldives was the first country to fully open their borders to the world amidst the pandemic. While the move was frowned upon by some, it has been done so with the utmost care and proper operating procedures to ensure the pandemic does not stagger the Maldivian economy any further. As a direct result of this, the World Bank has pointed out that the Maldives real GDP is expected to grow by 8.5 percent this year, and another 9.1 percent in 2023.
Historical perspective
The GDP of the Maldives has not always been one of note. Ten years ago, it barely broke through the USD7,000 per capita mark, and then entered a steep up rise by 2012. It peaked in 2019 at over USD10,000 per capita, only to plummet due to the onset of the pandemic. In 2020 it barely levelled off at USD7,000 per capita once again, but this recent report by World Bank shows that the decline has now come to an end.
Tourism, the main income source
Tourism levels were poised to catch up to pre-pandemic levels by 2021, ending the year at 22 percent lower from the 2019 numbers. Yet, a factor that contributed to this would involve the changes in tourists' average stay, as the income generated in 2021 had nearly reached pre-pandemic levels. This is suggestive of travellers staying for longer than before, keeping resorts at high capacity with lesser movement.
The global conflict in Eastern Europe has also taken the stride out of the economic growth, as Russia had contributed the highest number of travellers coming to the Maldives next to India, a competitive lead spot. With lesser travellers from Russia and Ukraine, and also the American pressure to align with the Western tactics of Russian sanctions has put the Maldivian tourism industry, and by extension the government, in a tough spot.
On top of this, one of the largest customer bases for Maldivian tourism, China, has still not resumed the same level of travel as before. An optimistic outlook is that once China, similarly to how India had done, reopens travel as freely as it once has been, the occupancy rates in the Maldives could most potentially skyrocket.
Making the economy boom
To meet this demand, albeit indirectly, multiple resorts had opened up in the last year alone. Increasing the bed capacity by twice the current levels had been the aim of the Tourism Ministry, led by Dr Mausoom, and this target may well be achieved within the next two years. With further expansion to the seaplane operators in the Maldives, travel can further be expanded.
Most importantly, with the opening of the new terminal (still bare bones at the time of writing of this article) would finally allow the new runway to be fully utilised. This could cater to a threefold increase in air traffic, which would undoubtedly increase tourist arrivals by droves.
