The Maldives was well on its way to recovering from the COVID-19 pandemic and its resultant havoc on the economy. Tourism was improving, with 1.3 million tourists having arrived in the country in 2021, far beyond the initial target set by the government for the year. In 2022, as of 8 March, 321,304 tourists had arrived, already accounting for 16 percent of the 2 million target set for the year.
According to statistics issued by the Ministry of Tourism, Russia was the Maldives' number one market for tourists as of 22 February, accounting for 15.7 percent of total arrivals. Ukraine followed in eighth place, with 3.1 percent of the market. They had been sixth and 23rd in 2019, prior to the pandemic.
Russia attacked Ukraine early on 24 February, coming in from various angles – missile attacks and ground assault from separatist areas in the east, from Crimea in the south, and from Belarus in the north. This spiked fears that the Maldives' tourism industry will face further declines during the year, given the position that Russia and Ukraine hold in the Maldives' tourism markets. By 8 March, the Russian market declined to hold 15.0 percent of total arrivals, although it still holds the number one spot. Ukraine has declined from 3.1 percent to 2.5 percent of total arrivals, and this is likely to decline even further, given that the country is in a state of war. Further, the Russian government has also announced that its national airline, Aeroflot, will not fly to international destinations, other than Belarus.
The Maldives does not have major trade ties with Russia or Ukraine, although a number of Maldivians study and live in both. Maldivians in Ukraine have now been repatriated back, with the government monitoring the situation of Maldivian students in Russia and Belarus.
The effect on the Maldives from the Russia-Ukraine conflict, apart from the direct effect on tourism, will stem from the soaring oil prices across the world as a result of the conflict. Brent crude, a major benchmark price for oil purchases across the world, was trading around USD75 per barrel at the end of 2021. However, prices increased to a high of USD139 during the week amidst fears of supply disruptions and the sanctions imposed on Russia by western countries. The United States has announced an immediate ban on Russian oil imports, while the United Kingdom has announced that it will phase out oil imports from Russia by the end of 2022. Russia is the world's largest oil and gas exporter.
The President's Office on 8 March said that the Cabinet has deliberated on the current situation, and the potential effects on the Maldivian economy as a result. It also said that pre-emptive steps to mitigate those effects and the Maldives' foreign policy stand was also discussed at the meeting, although the country's specific stand on the issue has not been disclosed. According to sources, the government, in particular the Ministry of Tourism, is also holding various discussions with industry partners to discuss next steps and actions to mitigate the impact on the Maldivian economy with the conflict.