The economy of Maldives will fully recover to pre-pandemic levels by 2023: World Bank

World Bank states that the Maldivian economy records strong recovery amid existing weaknesses and global challenges.

The World Bank stated that the economy of Maldives, buoyed by a strong rebound in tourism, is projected to grow at 7.6 percent in 2022 and fully recover to pre-pandemic levels by 2023, in their twice-a-year regional update. However, the bank raised concerns regarding the country’s high debt levels.

The latest Maldives Development Update released, underscores the growing momentum of the economy supported by a sustained recovery in tourism. While the report identified potential downside risks to tourism growth, Maldives is expected to see strong economic growth in the medium-term, with real GDP expected to grow by 10.2 percent in 2023.

Maldives faces vulnerabilities due to its large imports of fossil fuels as share of GDP and further increases in global energy prices may cause an additional fiscal burden.

Additionally, the Maldivian tourism sector could be adversely impacted by a persistent reduction in Russian and Ukrainian tourists due to the on going war. As well as reduction in tourist arrivals due to new waves of COVID-19 infections. However, there is some upside potential from increasing tourist arrivals from traditional source countries and new markets.

Moreover, the high debt burden of the country, is a huge concern for the Maldivian economic growth.

World Bank Country Director for Maldives, Nepal and Sri Lanka, Faris H. Hadad-Zervos stated that while the strong rebound in tourism is expected to boost Maldives’ economic recovery, with real GDP growth projected to return to pre-pandemic levels by 2023, prudent debt management remains critical to improving fiscal sustainability.

He said that the high dependence on tourism and limited sectorial diversification also remains a key structural challenge for Maldives.

The Country Director assured that the World Bank would continue to support Maldives in leveraging digital technologies and investing in renewables to achieve a green, resilient, and inclusive development path.