flag Maldives Maldives: Economic and Political Overview

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline | COVID-19 Country Response

 

Economic Indicators

The Maldives has been a development success until 2020, enjoying robust growth coupled with considerable development of infrastructures and connectivity. After shrinking due to the pandemic, the Maldivian economy bounced back with a 37.7% expansion in 2021, followed by 13.9% in 2022. While the Maldives has seen robust growth post-pandemic, it's now stabilizing: a drop in the average length of stays and reduced spending per tourist resulted in slower growth in 2023, reaching 4.4%. Projections indicate a 5.2% growth in 2024, driven by anticipated increases in tourist arrivals (IMF). The planned expansion of the Velana airport terminal, coupled with the expected rise in hotel accommodation capacities, is anticipated to enhance growth prospects. However, considerable uncertainty persists regarding the future outlook, with risks predominantly leaning towards the downside. This underscores the need for prompt policy adjustments to address the challenges ahead.

In 2023, travel export receipts experienced a contraction of 6.8% year-on-year, while merchandise imports remained high at USD 3.5 billion, fueled by increased imports of commodities and capital goods. Consequently, the current account deficit expanded significantly, estimated at 23.4% of GDP. Failure to execute planned subsidy reforms and a rapid escalation in recurrent and capital spending resulted in a notable surge in overall expenditure, leading to an increase in the fiscal deficit, estimated at 13.2% of GDP in 2023. In 2024, the fiscal deficit is anticipated to persist at a high level, driven by ambitious spending plans outlined in the approved Budget. There exists an unidentified financing gap exceeding USD 700 million. Consequently, the debt-to-GDP ratio is forecasted to hover around 120% over the medium term. In 2023, domestic inflation stood at 2.9% year-on-year, significantly surpassing its historical average of 0.5%. This elevated level was attributed to soaring global commodity prices and a cautiously implemented increase in the goods and services tax (GST) rate, reflecting fiscal prudence. The projected removal of blanket fuel subsidies is expected to lead to a rise in inflation in 2024 (IMF). 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. Furthermore, 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.

In the current context, the Maldives remains a relatively prosperous country in South Asia in terms of GDP per capita (USD 25,124 PPP in 2022), and its unemployment rate was relatively low in 2023 (at 4.2%, from 4.4% one year earlier - data World Bank). The upper middle-income poverty rate (USD 6.85 in 2017 PPP) stood at 3.9%, declining compared to the post-pandemic level. However, elevated prices may influence the labor market dynamics and exacerbate existing disparities in employment opportunities, potentially resulting in a 2.5 percentage point increase in poverty levels this year, as noted by the World Bank.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 6.246.697.207.908.46
GDP (Constant Prices, Annual % Change) 13.94.45.26.55.0
GDP per Capita (USD) 15,96216,82317,81819,22320,256
General Government Gross Debt (in % of GDP) 110.4118.7121.1118.8117.0
Inflation Rate (%) 2.62.63.83.02.0
Current Account (billions USD) -1.00-1.53-1.39-1.10-1.09
Current Account (in % of GDP) -16.1-22.8-19.4-13.9-12.9

Source: IMF – World Economic Outlook Database , Latest available data

Note: (e) Estimated Data

Main Sectors of Industry

 The agricultural sector accounts for 4.9% of GDP and around 7% of total employment (World Bank, latest data available). The agricultural sector of Maldives is based primarily on coconuts and other tree crops with only around 4,000 hectares under other agriculture crops (FAO). Most of the agricultural produce from the islands is used for local consumption in the islands and atolls. Fishing is the second-largest industry in the Maldives after tourism: more than 20% of the labor force of the Maldives is employed in the fisheries sector, and fish and fisheries products account for more than 98% of the physical exports from the country by quantity and value.

The industry sector is relatively small, contributing 10.3% of GDP and 25% of employment. The traditional industries consist of boat building and handicrafts, while the fish-processing industry is the most important. Overall, the manufacturing sector is estimated to account for only 2% of GDP.

The economy of the Maldives is based on services: overall, the tertiary sector accounts for around 73.3% of total GDP and 67% of employment. Tourism and related services directly contribute to 40% of the economy, 80% of exports, and 60% of exchange reserves. According to the latest data by the Maldives Monetary Authority, as a tourism-centric economy, the surplus on the services account is a fundamental aspect of the Maldives' current account. However, in 2023, this surplus declined by USD 333.9 million, totaling USD 2.8 billion, down from an estimated USD 3.1 billion in the previous year. The decrease in the services surplus was primarily attributed to a decline in tourism-related receipts, aligning with the decrease in resort bed nights throughout the year, despite an increase in total tourist arrivals and bed nights. Additionally, the services surplus contracted due to the rise in travel expenditure, reflecting the increased demand for international travel by Maldivians.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 10.5 26.4 63.1
Value Added (in % of GDP) 5.3 8.9 73.2
Value Added (Annual % Change) -0.6 4.5 46.8

Source: World Bank - Latest available data.

 

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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.

 
 

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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.

 

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Foreign Trade in Figures

The Maldives, which is composed of 1,200 islands, depends heavily on trade, which represents around 143% of the GDP (World Bank, latest data available). The state budget relies primarily on revenues from import duties; therefore, tariffs are relatively high (the average applied tariff rate is 10.6% according to the World Bank). However, as part of its trade policy, the government has removed quotas for the majority of products, and customs procedures have been simplified (obtaining an import license is almost automatic). The State Trading Organisation (STO) remains the country's largest importer, but the government is seeking to include more private partners. Fish products account for almost the entirety of Maldivian exports (93% in 2023), while imports are led by hydrocarbons (22%), transport equipment (19%), food items (19%), and machinery (8% - data Maldives Monetary Authority 2023).

In 2023, the Asian market maintained its dominance as the primary export destination for Maldivian exports, holding a significant share of 66%. Following closely was the European market, capturing a share of 31% during the same period. Within the Asian market, Thailand emerged as the leading export destination, constituting 54% of total Maldivian exports in 2023, marking an increase from 49% in 2022. Meanwhile, the share of exports to India experienced a slight decline, reaching 3%. Furthermore, the UK emerged as the top European export market, representing 14% of total Maldivian exports in 2023—an impressive rise from the 9% recorded in 2022. Following behind, Germany and France constituted the second and third largest export markets from the region, respectively. In terms of import sources, the majority, constituting 84% of total imports, originated from Asia. India led the way, contributing the highest share of imports to the Maldives at 16%, followed by Oman and the United Arab Emirates (UAE). Imports from Europe, accounting for 9% of the total, experienced a decline of 7% (equivalent to USD 24.3 million) during the year. Among European suppliers, while Germany witnessed a notable increase in imports to the Maldives, this growth was somewhat mitigated by declines in imports from France and the Netherlands (data Maldives Monetary Authority).

The country possesses few raw materials and, as such, relies heavily on imported oil and finished products. As a result, the Maldives imports much more than it exports, which creates a structural trade deficit. According to the Maldives Monetary Authority, in 2023, total merchandise exports, comprising domestic exports (38%) and re-exports (62%), saw a 5% increase, totaling USD 421.4 million. This uptick was primarily fueled by a significant rise in re-exports earnings. Conversely, total merchandise imports (c.i.f) experienced a marginal 1% decrease, totaling USD 3.5 billion by the end of 2023 compared to the previous year. The decline in merchandise imports was chiefly driven by a notable 9% decrease in import expenditure on all petroleum products, especially diesel (marine gas oil), reflecting the global decline in crude oil prices during the year. Despite a slight increase in the volume of such imports, the average global crude oil prices dropped to USD 80.8 per barrel in 2023, down from USD 97.1 per barrel in 2022. As a tourism-dependent economy, the surplus on the services account plays a crucial role in the Maldives' current account. In 2023, however, the surplus on the services account decreased by USD 333.9 million, amounting to a total of USD 2.8 billion, down from an estimated USD 3.1 billion in the previous year.

 
Foreign Trade Indicators 20192020202120222023
Imports of Goods (million USD) 2,8881,8382,5733,5163,497
Exports of Goods (million USD) 361286285400421
Imports of Services (million USD) 1,3377401,0921,589n/a
Exports of Services (million USD) 3,3811,5293,6994,696n/a
Imports of Goods and Services (Annual % Change) -0.3-41.135.2n/an/a
Exports of Goods and Services (Annual % Change) 6.7-51.489.5n/an/a
Imports of Goods and Services (in % of GDP) 78.468.467.8n/an/a
Exports of Goods and Services (in % of GDP) 69.449.475.3n/an/a
Trade Balance (million USD) -2,392-1,451-2,107-2,916n/a
Trade Balance (Including Service) (million USD) -348-662501191n/a
Foreign Trade (in % of GDP) 147.9117.8143.1n/an/a

Source: WTO – World Trade Organisation ; World Bank , Latest Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2022
Thailand 49.1%
Germany 9.5%
United Kingdom 8.5%
Mauritius 5.4%
India 4.1%
See More Countries 23.3%
Main Suppliers
(% of Imports)
2022
Oman 18.2%
China 15.9%
India 13.8%
Malaysia 6.6%
United Arab Emirates 5.7%
See More Countries 39.7%

Source: Comtrade, Latest Available Data

 
 

Main Products

0.2 bn USD of products exported in 2022
Frozen fish (excl. fish fillets and other fish...Frozen fish (excl. fish fillets and other fish meat of heading 0304) 57.1%
Prepared or preserved fish; caviar and caviar...Prepared or preserved fish; caviar and caviar substitutes prepared from fish eggs 20.9%
Fish fillets and other fish meat, whether or not...Fish fillets and other fish meat, whether or not minced, fresh, chilled or frozen 8.8%
Fish, fresh or chilled (excl. fish fillets and...Fish, fresh or chilled (excl. fish fillets and other fish meat of heading 0304) 3.5%
Ferrous waste and scrap; remelting scrap ingots of...Ferrous waste and scrap; remelting scrap ingots of iron or steel (excl. slag, scale and other waste from the production of iron or steel; radioactive waste and scrap; fragments of pigs, blocks or other primary forms of pig iron or spiegeleisen) 3.1%
See More Products 6.6%
3.5 bn USD of products imported in 2022
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 23.1%
Powered aircraft "e.g. helicopters and aeroplanes...Powered aircraft "e.g. helicopters and aeroplanes"; spacecraft, incl. satellites, and suborbital and spacecraft launch vehicles 2.0%
Telephone sets, incl. telephones for cellular...Telephone sets, incl. telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, incl. apparatus for communication in a wired or wireless network [such as a local or wide area network]; parts thereof (excl. than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528) 1.9%
Insulated "incl. enamelled or anodised" wire,...Insulated "incl. enamelled or anodised" wire, cable "incl. coaxial cable" and other insulated electric conductors, whether or not fitted with connectors; optical fibre cables, made up of individually sheathed fibres, whether or not assembled with electric conductors or fitted with connectors 1.6%
Bars and rods, of iron or non-alloy steel, not...Bars and rods, of iron or non-alloy steel, not further worked than forged, hot-rolled, hot-drawn or hot-extruded, but incl. those twisted after rolling (excl. in irregularly wound coils) 1.5%
See More Products 69.9%

Source: Comtrade, Latest Available Data

 
 

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Main Services

4.7 bn USD of services exported in 2022
95.79%
2.84%
0.84%
0.31%
0.22%
n/a%
1.6 bn USD of services imported in 2022
34.41%
29.48%
19.40%
6.08%
3.97%
3.66%
1.77%
0.95%
0.26%
0.02%
n/a%

Source: United Nations Statistics Division, Latest Available Data

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Sources of General Economic Information

Ministries
Ministry of Economic Development
Ministry of Finance
Statistical Office
Maldives Bureau of Statistics
Central Bank
Maldives Monetary Authority
Stock Exchange
Maldives Stock Exchange
Search Engines
Economic Portals

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Political Outline

Current Political Leaders
President: Mohamed MUIZZU (since 17 November 2023)
Vice-President: Hussain Mohamed LATHEEF (since 30 September 2023)
Next Election Dates
Presidential: 2028
Legislative: 2029
Main Political Parties
The Maldives is a multi-party democracy. The main parties include:

- People's National Congress (PNC): right-wing, conservatism, it split from the Progressive Party
- Maldivian Democratic Party (MDP): centre-right, liberal conservatism; it is the first political party formed in the Republic of Maldives and historically holds the majority of the seats
- The Democrats: centre-right, formed by a faction within the Maldivian Democratic Party
- Progressive Party of Maldives (PPM): centre to centre-right, it is the main opposition party
- Jumhooree Party (JP): centre-right
- Maldives Development Alliance (MDA): left-wing.
Type of State
Presidential Republic. 
Executive Power
Executive power is exercised by the government: the President heads the executive branch and appoints the Cabinet; whose members need to be approved by the Parliament. The President is directly elected by absolute majority to serve a 5-year term (renewable once).
Legislative Power
The legislative power is vested in the Parliament, whose sole chamber is called "People's Majlis" and counts with 87 members directly elected in single-seat constituencies by simple majority vote to serve 5-year terms. The Majlis has the power to enact, amend and revise laws.
 

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
 

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
Civil Liberties:
40 out of 60 (partly free) - Civil liberties (21 out of 60)

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

 

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COVID-19 Country Response

Travel restrictions
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.
Import & export restrictions
As of 2023, no particular measures related to the COVID-19 pandemic affect the Maldives' international trade. For a general overview of trade restrictions which were adopted during the pandemic, please consult the section dedicated to the Maldives on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
For the general overview of the key economic policy responses to the COVID-19 pandemic (fiscal, monetary and macroeconomic) undertaken by the government of Maldives, please consult the country's dedicated section in the IMF’s Policy Tracker platform.
Support plan for businesses
For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.

 

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Latest Update: May 2024