maldives tourism industry

Maldives anticipates robust tourism growth in 2024: MATATO reveals forecast

18 December, 2023

Maldives Association of Travel Agents and Tour Operators (MATATO) has unveiled its tourist arrival forecast for the year 2024, revealing a promising outlook for the tourism industry. According to MATATO’s comprehensive analysis of prevailing trends, the Maldives is expected to welcome a staggering 2.01 million tourists in 2024, marking a substantial 7.9% increase compared to the projected arrivals in 2023.

Several factors are set to propel the Maldives’ tourism sector to new heights in 2024:

• Resurgence of the Chinese Market:  The anticipated resurgence of the Chinese market is poised to be a pivotal factor driving increased tourism to the Maldives.
• Opening of New Tourist Establishments:  The introduction of new tourist establishments is expected to diversify offerings, attracting a broader range of visitors seeking unique and immersive experiences.
• Completion of Velana International Airport (VIA) Terminal:  The imminent completion of the new terminal at Velana International Airport will significantly enhance airport capacity, facilitating a larger influx of tourists.
• Sustained Demand for Luxury Travel:  The persistent demand for luxury travel experiences is projected to contribute significantly to the overall growth of the tourism industry.
• Rising Popularity for Destination Weddings and Honeymoons:  The Maldives’ increasing popularity as a destination for weddings and honeymoons is expected to be a driving force in attracting tourists seeking romantic and picturesque settings.

The forecast predicts the following regional distribution of tourist arrivals:

• Asia: 1.2 million arrivals (60%)
• Europe: 400,000 arrivals (20%)
• America: 200,000 arrivals (10%)
• Others: 210,000 arrivals (10%)

MATATO’s forecast is based on a meticulous analysis that draws from data over the past three years, the Airports Council International (ACI) 2024 forecast, the November forecast from the Finance Ministry of the Maldives, Booking.com Travel Predictions 2024, PwC’s latest UK consumer sentiment survey, and insights from an AI forecaster.

While the outlook is optimistic, potential risks include:

• Global Economic Downturn:  A global economic downturn could pose challenges to the anticipated growth.
• Rise in Travel Costs:  Escalating travel costs might impact the enthusiasm of potential travelers.
• Political Instability:  Ongoing political instability and conflicts globally could also influence the tourism industry.

The overall outlook for the Maldives’ tourism industry in 2024 is optimistic, with a strong surge in tourist arrivals expected. However, the industry stakeholders and authorities must remain vigilant, considering the potential risks that could influence the trajectory of the industry. The Maldives continues to position itself as a premier destination, offering a diverse range of experiences to cater to the evolving preferences of global travelers.

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Maldives Association Of Tourism Industry

The Maldives Association of Tourism Industry (MATI) is a non-governmental, non-profit organization formed in 1982, for the purpose of developing tourism in the Maldives. More than four decades of MATI’s service has been provided to almost all the travel and tourism related issues which arise in Maldives.

A key function of MATI is coordinating with all mandatory government policy making bodies to align new laws, regulations and guidelines to Tourism Industry best practices.

Additionally, we represent the industry internationally and locally by attending different seminars, organizing and providing research and offering professional consultation to governmental, private and international organizations.

Areas of Focus

• Sustainable Tourism Development
• Human Capital Development
• Preservation and Promotion of Culture and Heritage
• Community Engagement

Driving Sustainable Tourism.

Make Maldives the World Leader in Sustainable Tourism.

Continuously monitor the internal and external environment for the tourism sector and proactively strive to minimise challenges and maximise opportunities within the industry through engagement and mediation.

Announcements

Press Release – 1st Edition – MATI Insight 2024

Press Release

Press Release- The Maldives Association of Tourism Industry (MATI) holds its 34th Annual General Meeting

Industry news.

Baglioni Resort Maldives’ Sustainable Tourism and Community Engagement Initiatives

A Manafaru is Set To Host Renowned Mixologist Federico Penzo For An Exclusive Guest Mixology Experience

Two Years of Warm Welcomes at Hilton Maldives Amingiri Resort & Spa

Atmosphere Core Announces Two New General Managers

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beOnd Airlines wins “Cabin Concept of the Year” Award from Onboard Hospitality Magazine

Patina Maldives And Dive Butler International Announces Thrilling Summer Youth Sailing Academy

Mr. Ahmed Hafeez (Financial Controller, MATI)

Mr. Ahmed Nazeer (Secretary General, MATI)

Mr. Hussain Afeef (Vice-Chairman, MATI)

Mr. Salah Shihab (Vice-Chairman, MATI)

Mr. M.U. Maniku (Chairman, MATI)

• Topics ›
• Tourism worldwide ›

The Most Important Markets for the Maldives Tourism Industry

Tourism & hospitality.

From newly elected Maldivian president Mohamed Muizzu planning for Indian military personnel to leave the island and government officials insulting Indian Prime Minister Narendra Modi on X/Twitter due to a perceived slight to the trending hashtag #BoycottMaldives: The relationship between the two nations seems to have taken a downward turn over the last couple of months. As our chart based on data by the Maldives Ministry of Tourism shows, India has been the biggest source of tourist influx in the past year.

Between January 1 and December 31 of 2023, 209,198 Indians visited the smallest country in Asia , comprised of 26 atolls and situated 750 kilometers from the Indian coast. Russia is second in terms of tourist visits to the Muslim-majority island republic, followed by China. The latter climbing 27 spots compared to 2022 can be seen as one symptom of the deepening economic and political ties between the Maldives and the People's Republic. Other relevant origin countries for tourists visiting the atolls are the United Kingdom, Italy and Germany.

The online spat between the Indian and Maldivian netizens already seems to have a palpable impact on tourism. As vice president and global head of marketing at the India-based travel software company Rategain, Ankit Chaturvedi, told CNBC on Tuesday: "We are seeing a 40 percent drop in bookings over the last two days. Most people book on weekends, and therefore the drop seems more significant because ideally [bookings] should have gone up." Tourism is an integral part of the Maldivian economy. The sector makes up more than one quarter of the island nation's economy, followed by fishing and shipping.

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The changing face of tourism and work: How Maldives is successfully adapting to the pandemic

Valerie mercer-blackman.

It’s December 2023. Rita, a young businesswoman, has just finished meeting with clients in Chennai, India and anticipates meeting friends in Singapore for the holidays two weeks later. An employer-sponsored hybrid work model allows her to work from anywhere. She chooses to work at a guesthouse in Male, Maldives thanks to great Internet connectivity while spending time absorbing the local culture and South Asian cuisine, even trying her hand at snorkeling. Pre-COVID-19, she would have had to fly back from Chennai, India to snowy Chicago where she resides; go to the office for 10 days; work fighting an arduous jetlag; and then fly back East almost 10 thousand miles to Singapore. Now not only is she significantly reducing her carbon footprint, but she also feels revitalized after her stay in the Maldives, and is happier and more productive. Not to mention, she has contributed to Maldives’ tourism industry.

Is Rita’s practical yet creative twist on work-life balance indicative of the future of tourism—and work? 

According to various measures in the World Bank’s latest South Asia Economic Focus (SAEF), the region’s tourism heavy nations—Maldives, and to a lesser extent Nepal, Sri Lanka, and Bhutan—are well poised to take advantage of new services and digital technologies along with a new-found need for wellness post-pandemic, to boost their economies  . See a prior blog on services as the driver of development in South Asia.

Tourism: Savior for a Post COVID Economy?

Before COVID-19, tourism was among the fastest-growing sectors in Maldives and Bhutan, with a growth rate that outpaced GDP growth rates. The pandemic and related stringent measures hit all South Asian countries dependent on tourism hard, leading to a deep contraction in GDP in 2020.  According to the World Travel and Tourism Council , the entire global tourism industry, particularly business travel, was devastated by the pandemic.   Business spending decreased by 61 percent from 2019 to 2020 compared to 49 percent for leisure travel. Business travelers on average spend much more than leisure and domestic travelers, making the recovery of business spending essential for the entire travel sector. As the industry struggles to recover, there is also great uncertainty about how the future of work could transform the demand for travel, and many expect international business travel to be the last segment to recover as it is most sensitive to travel restrictions.

However, despite these uncertainties, our analysis in the South Asia Economic Focus shows that tourism has the potential to be a fast-growing sector post-COVID amidst new remote work possibilities and changing travel behaviors:

• The desire for travel is strong, spurred by the pent-up demand in leisure travel, which has been driven by new hybrid work environments and household savings during the pandemic. 
• As remote work becomes a long-term reality, more than half of the global tourists have expressed interest in extending business trips or working remotely in tourism destinations while enjoying leisure time.
• There is also evidence of an increase in the average duration of stay by 2.4 days since 2020, according to Tourism Status Updates by the Ministry of Tourism Maldives.
• The ravaging effects of COVID-19 on mental health may also increase the demand.
• COVID-19 is changing tourists’ attitudes and behaviors. According to recent online surveys by booking.com , more than half of global travelers, particularly younger travelers, started looking for travel plans that were more sensitive to the environment and local communities, including staying away from crowded tourist attractions and exploring lesser-known destinations.

South Asian countries already have a comparative advantage in developing niche tourism and ecotourism, as they are endowed with diverse natural and cultural resources. Therefore, small and tourism-dependent countries can view the pandemic as an opportunity to unleash the potential of tourism and pave the way for sustained growth going forward. 

Maldives: Setting the Bar High in Tourism

Maldives has been exemplary in its resilience and ability to recover. In 2021, visitor arrivals reached more than 80 percent of pre-COVID levels, far outpacing other similar tourist destinations. 

These are some lessons we can draw from Maldives’ spectacular recovery in the tourism sector:

• First, the government’s policies and interventions around the border restrictions and health regulations play an important role in the recovery of the tourism sector.  For example, Maldives took a concerted effort to reopen its border to tourists as early as July 2020 but implemented strict hygiene protocols for tourists, including one of the fastest COVID-19 vaccination campaigns in the world. This has improved the confidence of travelers and has created high-value consumers.
• Second, Maldives quickly made an effort to capture new source markets and expand to new countries of origin. For example, the emerging source of the international tourist market from Russia and India—in part arbitraging quarantine rules—has compensated for the tourism revenue loss from China, its top source market before the pandemic.
• Third, Maldives is seizing changing preferences to promote a better image. In 2020, Maldives launched a marketing campaign with the tagline “ Isolation never looked this good ” to emphasize its unique reputation of being a niche destination, while emphasizing environmentally sustainable tourism.
• Fourth, it is investing in digital technology as the demand for high-speed internet and contactless services rise due to the pandemic. In Maldives, more than 60 percent of the population has access to broadband Internet—with relatively high bandwidth speed—while other tourism-dependent South Asian countries are still lagging  , limiting the possibilities to meet travelers’ need for working remotely. Moreover, digital platforms will be important in minimizing physical interaction when traveling, while still fulfilling travelers’ needs. For example, one of the luxury resort in Maldives, has developed an app to facilitate contactless services including ordering food, virtual check-in and check-out, and other amenities to adapt to changing customer behaviors.

Adapt or perish? Maldives is choosing the former. It behooves other South Asian nations to pay attention as they build back resiliently post COVID-19.

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• REAL ESTATE
• HOSPITALITY

The Maldives Tourism Industry Records Positive Q2-2023 Revenue Results

The Maldives Monetary Authority (MMA) has revealed that the country’s tourism sector has generated USD 883.4 million (MVR 13.62 billion) in revenue during the second quarter of 2023. Despite entering the off-peak season, tourism from China has surged, with Chinese tourist arrivals increasing by 42,987 compared to the previous year. Russian arrivals also contributed to this growth, rising by 48% in the same period.

Despite a decline in arrivals from India and the European market, the total number of tourist arrivals for Q2-2023 reached 405,679, marking a 6% increase compared to the same quarter in 2022. This surge in arrivals led to a 6% increase in estimated travel receipts, totalling USD 835.6 million. Europe remains the dominant source region, accounting for 49% of arrivals, followed by Asia and the Pacific region at 38%. The market share of the United Kingdom decreased, while Russia’s share continued to rise.

International flight movements increased slightly, with new carriers entering the market, and the operational bed capacity in the industry saw a 7% increase. However, the occupancy rate dropped to 51%, reflecting the start of the off-peak season. Globally, tourism is recovering, with international tourist arrivals up by 86% in Q1-2023 compared to the same period in 2022, reaching 80% of pre-pandemic levels. Europe and the Middle East played a significant role in this recovery, driven by strong air connectivity and pent-up demand, suggesting a promising outlook for the upcoming summer season.

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How the Maldives Transformed From a Fishing Archipelago to a Tropical Hot Spot in 50 Years

And a look at how the hospitality industry is ensuring the destination’s future.

The beauty of the Maldives comes naturally, but the hospitality infrastructure has been built up by hoteliers over the last 50 years. In the '70s, the Maldives was a remote, largely uninhabited archipelago. Fishermen lived on the islands, but there were no regular flights to the area and no investment in the Maldives as a destination. Without tourism infrastructure, the small airstrip on Hulhule Island — which could barely be considered a commercial airport — didn't see much traffic, and the travel world remained entirely unaware of the Maldives.

Today, the Maldives — which is made up of nearly 1,200 tiny, pristine islands — tells a different story. The development and growth year over year has been exponential. Between 2018 and 2021, nearly 50 new resorts have opened or are in the process of opening. And that growth rate is now considered fairly typical in the Maldives; 11 new resorts came online in 2016, followed by approximately 15 new properties in 2017.

The Maldives is today known for their one island, one resort concept. The multitude of picturesque little islands affords hotels the opportunity to develop their own private island community. The first Maldives resort opened in 1972 : Kurumba. It came about when George Corbin, a travel agent from Italy, met with Ahmed Naseem from the Maldives Embassy. Corbin was looking for an under-the-radar island escape for his clients, and Naseem brought him to the untouched islands of the Maldives in 1971. A year later, they returned with journalists and photographers to show the potential of the Maldives to the world.

Kurumba opened in October 1972, welcoming guests to a previously unheard of concept: a Maldivian hotel. The 30-room resort was booked solid in their first year. Corbin and Naseem set the precedent that Maldives had immense tourism potential, and Kurumba's success solidified that notion. Because of the example Kurumba set, foreign investments came rolling in, and as the tourism infrastructure has taken shape, the country's economy has vastly improved. The Maldives population has doubled from 156,000 residents in the '80s to 300,000 in 2012. And Maldivian residents' incomes, life expectancies, and literacy rates have all significantly increased in that time.

Now, 50 years from the birth of the Maldives as a tourist destination , the focus is on preservation. The last five decades have seen tourists come in droves, and where there was once untouched reef, there are now overwater bungalows, underwater restaurants, and more divers, snorkelers, and swimmers than the ecosystem ever bargained for. Fortunately, those opening new hotels are all too aware that the reason people came to Maldives in the first place was to experience the islands' natural beauty. And as a result, the hotels are working hard to preserve and protect the Maldivian ecosystem.

Patina Maldives, Fari Islands has facilities powered entirely by solar energy, zero-waste kitchens, and a marine plastic recycling program reducing ocean pollution. Patina, which just opened in spring 2021, proves that the properties opening in the Maldives these days have to lead with sustainability. In their first season, they are already working toward their goal of being 50 percent solar powered by 2030. JOALI Maldives is growing coral at the hotel's underwater nursery, so they can then transplant the coral to a snorkel trail accessible to the hotel's guests. Their goal is not only to repair the parts of the nearby reef that have been even slightly damaged, but also to get guests involved in the reef restorative initiative. And Four Seasons Resorts Maldives is caring for injured Olive Ridley turtles in order to release them back into the wild. Their turtle rehab clinic, which collaborates with zoos and researchers in Europe to improve the health of Maldivian turtles, is run by the Four Seasons' marine conservation team, Marine Savers .

In 50 years, the Maldives went from 1,192 islands with no foreign investment to a tropical paradise filled with private island resorts. Interest in both visiting the Maldives and developing hotels there is still at an all-time high, but with every trip booked and every hotel opened, there is an emphasis on preserving the unadulterated beauty those first visitors fell in love with in the 1970s.

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TTM Report: Maldives Tourism Industry Forecast 2023

Key Findings • Total tourist arrivals to reach 2.5 million by 2023 • Indian market to overtake Chinese market by 2021 • Indian and Chinese market to have 30% market share by 2023 • Europe to remain the largest market by region • Average Daily Rate and Average Stay to fall with increase in Asian markets • Operating bed capacity to increase by average 8%

Tourism industry is the largest economic industry in the Maldives. It plays a significant role in contributing towards the economic growth, earning foreign exchanges and creates employment opportunities in the tertiary sector.

Our team at TTM decided to look into a brief overview into the Maldives tourism industry for the year 2019, including the key markets and the highlights along with the future forecast of the demand and supply of the industry for the next 4 years.

Current Status According to the statistics by the Ministry of Tourism, 2019 proved to be one of the most successful years with reaching target of 1.5 millionth tourist arrival on November 24th, Maldives welcomed a record amount of 1,702,831 tourists. This was a 14.7% increase compared to 2018.

After slowing in 2018, tourist arrivals rebounded during the first half of 2019 and continued to do so throughout the year. Europe has been the strongest region for the Maldives for the past few years and even in 2019.

In 2019 tourist arrivals from Europe (49%) was with a 14.8% increase and 833,904 tourists. The second strongest performance was from Asia and the Pacific (41.4%). There were 705,117 tourists from this region in the year. This is a 13.5% increase compared to 2018. This was followed by American countries (5%) with 84,793 tourists, Middle East (3.5%) with 60,003 tourists and Africa with 18, 698 tourists. Looking at the top 10 country-wise markets, though China market has continued to be in the top, after no increase in the growth for the past 3 years, the market had a 0.3% increase in 2019.

Indian market, which was at 5th place in 2018 with 66,955 tourists, jumped to the 2nd position with a whopping 166,030 tourist arrivals in 2019 and India showed the highest growth rate with 83.5% in 2019.

India is now one of the fastest growing outbound tourism markets in the world, second only to China. The United Nations World Tourism Organization (UNWTO) estimates that India will account for 50 million outbound tourists by 2020.

Maldives being geographically closer to the Indian market contributes to this growth. In addition to this, the emergence of more airlines and routes has increased the availability of options for the Indian travelers.

Indian budget carriers such as GoAir, Spice Jet and Indigo have launched direct connections between Male and important Indian cities such as New Delhi, Bangalore and Mumbai.

The Germany and USA market also continued to show increase as the previous years while other markets Italy, UK, Russia, France, Japan and Australia showed a steady increase.

Looking into the supply, with over 20 new resorts opened in 2019, there were 927 tourist centres registered by the end of 2019. Traditionally, the tourist centres mainly compromised of the resorts, however with the emergence of local island tourism in 2017, guesthouses have opened new options for even the budget travelers. Every year Maldives has witness over 1000 new operating bed capacity from guesthouses itself.

By the end of 2019, the tourist centres include 152 resorts, 12 hotels, 607 guesthouses and 156 safaris. All this combined gave an accumulated operating bed capacity of 49, 924. This was a 13.9% growth in the operating bed capacity for 2019 compared to 2018.

Future Forecast The government has aimed to set new target of 2.5 million annual arrivals by 2023.

As per the past growth trends of the markets, Maldives is expected to welcome 1.8 million tourists in 2020, reaching 2.5 million tourists by 2023.

According to the forecast, if the slow growth of Chinese market continues, while the Indian market continues to grow, Indian will surpass the Chinese market to become the largest market for Maldives tourism industry. As per the market growth by region, Europe market will remain the top market but the Asia and the Pacific market will keep increasing as well.

The American market and African is expected to increase almost a double by the end of 2023.

As per the supply, the government has announced that tourism sector will increase 1,300 beds in 2020 with 13 new resorts and 74 guesthouses.

Maldives will need the operating bed capacity to be at 53,078 by 2020 to generate 70% bed night occupancy of 13 million. This will require 2.2 million tourists on an average of 6 nights. However as per the forecast, by end of 2020 Maldives is expected for 11 million actual bed nights with occupancy at 61%.

By the end of 2023, with 63,937 operating bed capacity, for 70% bed night occupancy, Maldives requires 16 million bed nights. This will require 2.7 million tourists on an average stay of 6 nights. But, according to the forecast, by end of 2023 Maldives is expected receive 15 million bed nights with an average occupancy at 67%.

But the worrying factor is the with the ever-growing Asian market, the average stays could be lower and thus resulting in much lower bed nights even with an increase in total tourist arrivals. Since ADR is lower for Indian and Chinese markets, another concerning factor is that this could reduce the average ADR considerably since these markets will account to over 30% of the total tourist arrivals to the Maldives by 2023.

Conclusions – Recommendations It’s important to have more European connectivity focused on our traditional European markets if we want to maintain a better average stay and ADR. Thus, with fewer arrivals’ figures can provide better over tourism receipts. Aviation industry policies of Maldives must align with tourism marketing policies by focusing on key European markets. Either by giving incentives to fly to Maldives or bilateral government talks can help to boost the routes from Europe to Maldives. It’s important to identify top 15 markets for long-term and focus on air connectivity to these to ensure that expected arrival figures are met.

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Maldives’ tourism looking up after reopening

• Asia and the Pacific

Despite challenges faced during the year, the Maldives welcomed a total of 555,494 international tourists in 2020. In January 2021, arrival numbers stood at 92,103 and it increased to 99,397 by 3rd February 2021 with a daily average of 2,923 tourists. Though this was a decline of 47.5% compared with that of 2020, tourists are seen spending their holidays for longer duration, extending the average duration of stay in the Maldives from 7.2 days in 2020 to 9.2 days in 2021.

The Maldives observed significant changes to its top markets since re-opening of borders on 15 July 2020. As of 3rd February 2021, Russia stood at the top as the number one market with 23% shares and 22,365 tourists. India followed closely behind with 21% shares and 20,933 tourists. Ukraine, which made it to the top market list of Maldives after the re-opening of borders, stood third in the list contributing 7.8% shares with 7,709 tourists. Other top source markets include Kazakhstan (4.9%), France (4.5%), Romania (3.8%), Germany (3.7%), United Kingdom (2.6%), Czech Republic (2.2%) and U.S.A (2.1%).

The Maldives is seeing optimistic results with recovery trends from Central/Eastern Europe and South Asian region as well as some markets from the Middle East and Americas. Central/Eastern Europe and South Asia posted a double-digit growth of 63.9% and 24.6% respectively in 2021 as of 3rd February. Individual markets such as Ukraine, Kazakhstan and Romania posted growth rates over 100%.

Since the re-opening of Maldives borders, 27 scheduled airlines are operating to the Maldives, from various countries across the globe, most of them being long haul. The highest number of movements and passengers came from Emirates, Qatar Airways, Indigo, Go Air and Aeroflot. With the rapid growth in new markets from Central and Eastern Europe, 6 flights from the region are now operating to the Maldives.

Looking at COVID-19 situation in the Maldives, as of 3rd February over 3000 samples are being tested daily, which includes departure samples. The tourist’s positivity rate, as a percentage of total arrivals remain significantly low at 0.08% in January 2021. As of 3rd February 2021, there are 3 COVID-19 hospital facilities in greater Male’ area with 266 beds and additional 6 COVID-19 hospital facilities across the country with a total of 188 beds. In isolation facilities, tourists stay in private areas with special arrangements and are closely monitored by healthcare professionals.

The Maldives tourism recovery drive has been anchored on facilitating maximum safety and security possible to tourists, employees and the public, with minimal inconvenience.  With over 87% of the total 51,000 beds now in operation in resorts, hotels and guesthouses, and liveaboard safari boats, Maldives expects to welcome 1.5 million tourists and 10 million bed nights in 2021.

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• Maldives Tourism Updates 2023 Issue - 09  as of 02 March 2023  here . 
• Maldives Tourism Bulletin, June 2023, here

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Maldives as tourist hub: Its history and what lies ahead for island nation

Maldives, with a population of 550,000 people dispersed across 185 islands, has become a popular tourist hub in the last five decades and today attracts about 25% of its gdp directly from tourism.

Maldives' annual GDP is largely driven by its tourism sector, which accounts for about 25 per cent of total share.

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Maldives' history as tourist destination

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The World Bank In Maldives

A partner of the World Bank since 1978, Maldives has been a development success story of sustained growth and impressive improvements in health and education. The country faces a number of environmental, climate, and inclusion challenges that we're working together to help address.

• Country Context

The economy is projected to grow by 4.7% over the medium-term, supported by tourism, a decrease from the pre-pandemic average of 7.4%. This growth is based on expected fiscal adjustments, including subsidy reforms and reduced public expenditure and investments. This slowdown also means slower poverty reduction in 2024.

The fiscal deficit is expected to remain high in 2024 due to ambitious spending plans .The proposed fiscal reform package is expected to help but a more sustainable fiscal path requires a larger adjustment, particularly through cuts in non-essential capital and untargeted recurrent spending.

Inflation is expected to rise due to the removal of blanket subsidies, potentially driving poverty by 2.5 percentage points. The current account deficit is expected to remain high due to commodity price pressures and capital imports for infrastructure projects. Rising external financing needs, including debt servicing, are expected to sustain pressure on foreign exchange reserves.

Major downside risks include a shock to the tourism sector, limited domestic and external financing, and a widening current account deficit. To maintain macroeconomic stability, a major fiscal adjustment and a multi-year reform plan are required, along with a targeted transfer mechanism to offset welfare losses among vulnerable groups.

Recent economic developments

In 2023, the number of tourist arrivals reached a record-breaking figure of 1.88 million. Nevertheless, this did not result in higher GDP growth due to lower per-tourist spending and shorter stays. The Maldivian economy is estimated to have grown by 4% in 2023. Domestic inflation, at 2.9% in 2023, remained higher than the historical average of 0.5%. Price increases were experienced in the food, education, restaurant, and lodging services sectors. Food inflation could increase poverty by 0.4 percentage points, with atolls experiencing even higher rates.

Travel export receipts fell 6.8%, while merchandise imports remained elevated at $3.5 billion. This resulted in a current account deficit of 23.4% of GDP. High import costs and external debt repayments also weighed heavily on gross reserves, which fell to $551.1 million in January 2024. Failure to implement planned subsidy reforms, combined with rising recurrent and capital spending, resulted in a sharp increase in total expenditure and a fiscal deficit of 13.2% of GDP in 2023.

Tourism, which accounts for a quarter of the Maldives' economy, has experienced slower growth in 2023 due to a decline in average duration of stay and lower tourist spending. This slowdown has exposed underlying economic vulnerabilities in the Maldives.

These vulnerabilities stem from persistent large current account and fiscal deficits. The country relies heavily on imports while having limited official reserves, creating an unsustainable imbalance. Government support for struggling state-owned enterprises (SOEs), along with blanket subsidies, high capital spending, and a public health program, further exacerbate these pressures.

While these subsidies and in-kind transfers are crucial for boosting household incomes, their unsustainable nature raises concerns. When fiscal pressures mount, the Maldivian people's well-being could be negatively impacted. Additionally, infrastructure projects, although promising long-term growth, were financed through non-concessional external borrowing and sovereign guarantees. The rising cost of borrowing abroad has forced the government to turn towards domestic sources, increasing the domestic financial sector’s vulnerability to government debt.

The government recently announced its commitment to a fiscal reform agenda to address these economic vulnerabilities. This agenda includes reforms to subsidies, SOEs, the public health insurance scheme (Aasandha), and reprioritizing capital spending. These reforms offer a path towards a more resilient Maldivian economy.

Last Updated: Apr 02, 2024

World Bank Program in Maldives

Maldives became a member of the World Bank in 1978 and has enjoyed a trusted partnership with the institution over the past 44 years. Working together, the country has implemented various projects in support across many development areas.

Maldives has an active portfolio of 12 projects – 11 International Development Agency (IDA) projects, 1 IDA guarantee and 1 regional project – with a total net commitment of $258 million. The projects are focused on fisheries, solid waste management, renewable energy, employment and social protection, urban development, COVID-19 response, digital development, youth resilience, health systems, and financial management.

The World Bank also provides analytical support in macro monitoring and analysis, financial sector, youth and gender, health financing, social protection, and poverty.

The World Bank’s new Country Partnership Framework (2023-2027), adopted in January 2023, aims to help the Maldives navigate through risks and vulnerabilities to reach a greener, more resilient, and inclusive high-growth future. Under the new CPF, the World Bank’s engagement with the Maldives focuses on improving resilience to shocks, increasing access to economic opportunities, and improving human capital outcomes. Deepening the digital economy, to accelerate economic transformation, is also a cross cutting theme.

IFC Collaboration

Maldives joined the International Finance Corporation (IFC), in 1983. Since then, IFC has invested nearly $250 million. Currently, the portfolio in Maldives is $53 million with commitments in Dhiraagu, Bank of Maldives (BML) and Housing Development Finance Corporation (HDFC). 

In response to the COVID-19 crisis and in line with its strategic priorities in Maldives, IFC had pivoted resources to support key sectors adversely impacted by the pandemic. At the request of the Government, and in line with IFC’s countercyclical role, support to the Maldives with liquidity access was provided in the early stage of the pandemic. IFC’s investment of $50 million in BML provided financing for private sector companies and small and medium sized businesses in the tourism sector, to help preserve jobs and combat the negative shocks of COVID-19 on the economy. IFC also invested over $50 million directly in the tourism sector in FY20 via its investment in John Keels Holdings and $22.4 million through the Crescent Fund in FY23. Further, a $35 million landmark investment in Dhiraagu (in FY22/23), the largest telecommunications and digital service provider in the country, is helping Maldives digitize faster.

IFC’s strategy for FY21-25 in Maldives revolves around 3 pillars: sustainability, inclusion, and connectivity anchored by the tourism sector. IFC is committed to helping the Maldives achieve its ambitious target of net-zero emissions by the year 2030 through sustainable growth by increasing the use of renewable energy, further greening resorts, building climate resilient infrastructure, and enhancing sustainable waste management. Physical and digital connectivity also remain key strategic priorities along with accelerating SOE reforms. Achieving these strategic priorities will require close collaboration with the World Bank. IFC is also actively seeking to partner with other DFI’s, specifically to mobilize financing to further strengthen the Maldivian economy.

Last Updated: Oct 04, 2023

Supporting COVID-19 response:  The  COVID-19 Emergency Response and Health Systems Preparedness Project continues to support the Government in early detection, contact tracing, quarantine and isolation, and case management, while strengthening health systems to better respond to potential health crises.

Accelerating clean energy transition: The Accelerating Sustainable Private Investment in Renewable Energy (ASPIRE) and Accelerating Renewable Energy Integration and Sustainable Energy (ARISE) projects are pivotal in driving energy sustainability in the Maldives. ASPIRE, launched in 2014, has successfully mobilized private sector investments in photovoltaic infrastructure, marking a significant financial influx. Expanding on this triumph, ARISE, initiated in 2021, incorporates IDA/MIGA guarantee mechanisms to scale renewable energy, storage, and grid upgrades. Together, the projects are poised to unlock substantial private sector funding, propelling the Maldives towards its renewable energy objectives while underlining the importance of well-designed projects in advancing sustainability.

Protecting natural resources and strengthening nature-based industries:  The World Bank's IDA support is helping island communities in enhancing local waste management, recycling, and re-use practices, including plastics. A new Transforming Fisheries Sector Management in South-West Indian Ocean Region and Maldives (TransFORM) Project will support improved biosecurity systems, decarbonization, improved implementation of management plans, and enhanced competitiveness and private sector participation for improving business climate in the fisheries sector. The Maldives Country Environmental Assessment (CEA), due for launch soon, will offer valuable insights into coastal resilience, sustainable development, and the tourism sector's environmental impact. Similarly, the Maldives Country Climate Development Report (CCDR) highlights the interconnection of climate change and development. It aims for completion within the next year, contributing to climate action and resilience building in the Maldives.

Preparing youth for the modern labor market: The Maldives Enhancing Employability and Resilience of Youth Project (MEERY) enhances the long-term capacity of the education and skills development, and entrepreneurship systems to produce new graduates in priority skills and fortify the resilience of youth to labor-market cycles. The Sustainable and Integrated Labor Services (SAILS) project aims to enhance the resilience and employability of Maldivian workers by establishing a comprehensive social insurance program and integrated labor market services.

Strengthening public financial management:  With the  Bank’s support , the Ministry of Finance has made considerable progress on improving transparency through making the budget and financial information available through an integrated financial management system.

Accelerating digital development: A new Digital Maldives for Adaptation, Decentralization and Diversification project is helping the government promote competition in the broadband market, modernize the national identification systems to facilitate online services and transactions, and improve climate-related data and analytics.

Strengthening the private sector and reforming SOEs: A new Maldives Competitiveness and Growth Project will help the government enhance private participation and critical reforms in selected SOEs and support the growth of private small and medium enterprises through increased access to commercial loans and technical support.

Maldives : Commitments by Fiscal Year (in millions of dollars)*

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Embracing sustainable tourism in Maldives: A call to action

On this World Tourism Day, it’s crucial to evaluate the future of tourism in the Maldives, a paradise known for its breathtaking waters and rich marine biodiversity. The sustainability of this industry is at a crossroads, demanding urgent attention to environmental issues that threaten both the ecosystem and the livelihoods of those who depend on it. To ensure a thriving tourism sector, we must prioritise environmental sustainability and address key challenges head-on.

The Urgency of Environmental Protection

The Maldives is acutely affected by climate change, facing rising sea levels and extreme weather events that jeopardise its delicate ecosystems. Coral reefs, vital not only for marine life but also for tourism, are suffering from coral bleaching. Only this year itself we 40% of coral reef has gone complete bleaching. This phenomenon, largely caused by elevated ocean temperatures and pollution, poses a significant threat to the very attractions that draw tourists from around the globe. Protecting these ecosystems is essential for both environmental health and the longevity of the tourism sector. The most recent government has initiated a few commercial projects without completing Environmental Impact Assessments (EIAs), which will adversely affect our ecosystems. The majority of resorts and local islands do not have proper waste management systems, while some resort owners and government officials focus on recreational facilities such as building football grounds. This a sad truth.

Addressing Food Security

Tourism in the Maldives creates a surge in demand for food, quality and quantity. often leading to overfishing and unsustainable agricultural practices. This not only endangers local fish populations but also compromises food security for Maldivians. By promoting the use of locally sourced ingredients and sustainable fishing methods, we can support local economies while ensuring that our natural resources are not depleted. Moreover, this approach enhances the authenticity of the visitor experience, allowing tourists to enjoy the true flavours of the Maldives.

The Impact of Development

While commercial development is necessary to accommodate tourism, it often comes at a significant environmental cost. Activities such as harbour construction and coastal development can lead to habitat destruction and negatively impact marine ecosystems. To navigate this challenge, it is vital to adopt eco-friendly practices in all commercial endeavours. Enforcing strict environmental regulations and advocating for green building techniques can help mitigate the ecological impact of tourism-related infrastructure.

Implementing Mitigation Strategies

To combat these pressing challenges, we need robust environmental mitigation strategies. Investing in renewable energy, implementing effective waste management systems, and designating marine protected areas are essential steps toward sustainability. By establishing regions where fishing and tourism activities are carefully regulated, we can help restore marine habitats and promote biodiversity.

Raising awareness among both tourists and local communities about the importance of sustainable practices is equally vital. Educating stakeholders can cultivate a culture of environmental stewardship, empowering locals to innovate solutions that benefit both the ecosystem and the economy.

Note: Shameem Mohamed serves as the General Manager at Nika Island Maldives.

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President Muizzu's Comprehensive Plan To Boost Maldivian Tourism

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Colombo, September 28: The Mohamed Muizzu government in the Maldives has worked out a comprehensive plan to boost tourism that had suffered a serious setback due to an unofficial Indian boycott earlier this year.

The“Fifth Tourism Master Plan” (5TMP) has been developed with the help of the Asian Developed Bank.

Tourism Minister Abdulla Mausoom has said that the 5TMP sets out the vision, policy priorities, and strategies for the industry for 2023-2027. It was developed through comprehensive consultations, in-person and virtually, over some 70 meetings with industry stakeholders. Field visits were conducted in various regions.

The 5TMP examines priority areas such as business and legal environment, human resource development, environmental conservation, information and communication technology, social and cultural environment, and safety and security.

By incorporating recommendations from the UN Sustainable Development Goals and international best practices, the 5TMP's vision is to position Maldives as the world's leading destination in sustainable tourism.

In recent times, Maldivian tourism suffered two shocks, the first from COVID 19 which brought down arrivals by 67% and the unofficial Indian boycott which led to a loss of US$ 158 million early this year.

The boycott was called by Indian tour operators, Bollywood celebrities and the media, after certain steps that President Muizzu took that hurt Indian interests in the Indian Ocean archipelago. Additionally, three junior Maldivian ministers had made uncharitable remarks against Indian Prime Minister Narendra Modi.

Ibrahim H.Shihab, writing in Maldives Republic says that in 2021 291,787 tourists had arrived from India. This fell to 241,382 in 2022. In 2023, it come further down to 208,430. In 2024, up to September 24, only 88,202 had arrived, indicating a steep fall in Indian arrivals.

There upon, the Muizzu administration undertook several efforts to improve relations with India and also launched campaigns such as 'Welcome India.' But there is still a shortage of 55,000 arrivals from India, Shihab said.

Be that as it may, Maldivian tourism has been able to increase arrivals from China and Western European countries. Muizzu visited Beijing in January and sought Chinese arrivals. .

As a result, as of September 24, 1.45 million tourists had visited the Maldives, a 10% over last year. On an average, 5,465 tourists arrived daily, with average stays recorded as 7.7 days per visitor, Shihab says. President Muizzu anticipates two million tourists this year, with an expected average annual growth rate of 10.3% in the medium term.

Current Facilities

According to the 5TMP, in 2022, there were 59,753 beds for international tourists under the“One island, One Resort” concept. There were 176 resorts across 1192 islands.

In addition to resorts there were 14,146 beds in the 874 tourist guest houses, which accounted for 28.5% of the accommodation. There were also“safari vessels” providing accommodation.

About 40% of the available accommodation was in the Kaafu atoll and the Greater Male Region. As for international air connectivity, 36 airlines connected Male with 39 places in 25 countries. Of the approximately 2 million arrivals in a year 1.7 million were on a holiday. About 25% were honeymooners.

Maldives had 556 travel agencies and 193 diving agencies, 90% being small-scale. In the food sector, there were 525 restaurants and 1550 cafes.

Tourism is the single most important source of livelihood in Maldives, accounting for 40% of the GDP. 85% of the forex earned by the country comes from tourism. In 2021, Maldives earned US$ 3.5 billion from tourism. This sector also contributed 43% of government revenue. Tourism is also the most important area for foreign investment. In 2021, US$ 443.5 million had come as FDI in the sector.

As per the 5TMP, Maldives is cut out for advancement. President Muizzu is hoping to double income from tourism from US$ 3.5 billion in 2021 to US$ 6 billion by 2027. The 5TMP envisages a 50-60% increase in accommodation and 25 to 40% increase international air connectivity.

Since only a fraction of the 1192 atolls are covered by tourism, the government plans to increase facilities in all atolls.

The President had announced the“Asseyri Tourism project” in Addu City, aiming to diversify and expand the tourism sector. This initiative includes the establishment of a seaplane hub in Addu City, the inauguration of 20 new resorts, and the revitalization of non-operational resorts.

The government, collaborating with various ministries and councils, is also working on completing 63 tourism development projects across different islands. Additionally, the 'Visitor Economy Council' has been established to broaden tourism services, with a focus on MICE tourism, education, culture, heritage, health, and environmental tourism.

In transportation, President Muizzu disclosed plans to construct two new airports and introduce advanced, secure helicopter services. The ongoing projects for building domestic airports are nearing completion, enhancing the country's transport infrastructure. Additionally, the national airline, Maldivian, plans to acquire two new wide-body aircraft and introduce seven new international destinations

To break the monotony of sea, sand and islets, the tourism industry is expected to increase its range of products taking care to include Maldivian native specialities and keeping the environment safe from degradation. Net zero emission is the aim as the Maldives at is already exposed to a variety of environmental threats.

One of the important areas of development envisaged is the recruitment of highly motivated young people to opt to work in the tourism sector instead of going for desk jobs in Male. Motivational and training programmes have been recommended.

Maldives has amended the 'Regulation Governing Foreign Tourist Vessels Cruising and Harbouring in Maldivian Waters'. It stipulates that only Maldivians can serve as agents for foreign tourist vessels arriving in the country. Under the new amendment only companies with Maldivian shareholders are permitted to act as agents for foreign vessels.

President Muizzu is keen that tourism be accessible to all classes of society so that it becomes a societal commitment and movement. Societal norms developed around tourism will greatly contribute to its development and sustainability, he believes.

Community-participation in maintaining the right environment for international tourism is a must and for this, awareness should be created and incentives given the 5TMP says.

Research, data analytics and a“whole of government” approach are urged to get accurate assessments, and ensure effective execution with the best results.

Efficient and adequate inter-island transport is another identified for development. Electric vehicles and boats are recommended to keep down pollution.

Tourism needs investment especially in far off atolls and for this incentives like tax concessions should be considered. But care should be taken to see that the desired results are attained and the foreign exchange earned is kept in the Maldives.

President Muizzu is planning to create“iconic” resorts so that the innovative spirit is instilled in investors. Among the innovations he is seeking is the use of local materials, foods, etc. Tourists could be encouraged to have local foods like tuna, reef fish, lobster, coconut, banana, water melon etc. The environment should be“Maldivian” with an abundance of coconut palms.

The atolls must be encouraged and facilitated to opt for organic agriculture and the people motivated to keep the atolls clean with, with proper sanitation. Proper water and waste management and also power management techniques must be adopted in the resorts and atolls.

Resorts should be facilitated to use solar power instead of diesel. As of now, each room, each day, uses 46 litres of diesel, which is too much.

Since tourism improvement and expansion needs funds, government should issue Treasury Bills and bonds and take steps to retain foreign exchange earned by the sector, the 5TMP says.

It should also take steps to attract tourists from the non-traditional markets like Hungary, Ireland, Brazil, Saudi Arabia, UAE and of course China, which is still not measuring up to its potential. The industry and government should also devise means to attract tourists during the off season (June to September), the 5TMP said.

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