The Maldives’ economy is heavily dependent on tourism, with the sector directly contributing to 40% of the country’s GDP, 80% of its exports, and half of its total revenues. The COVID-19 pandemic brought global tourism and travel to a standstill, leading to a 67.4% drop in tourist arrivals and a 32.9% contraction in the economy, the deepest recession on record. The sudden stop in tourism, the main driver of growth, jobs, and revenues, had devastating economic consequences for the tourism-dependent economy. The country’s heavy reliance on tourism and fisheries for livelihoods makes it vulnerable to any impact on tourism, with disruptions from the pandemic and new shocks from the war in Ukraine highlighting the sector’s fragility.
However, the Maldives has seen a steady rebound in tourism, with over two-thirds of the country’s population fully vaccinated and tourist numbers steadily increasing since late 2020. After an 18-year record low of 555,494 visitors in 2020, the country attracted 1.3 million visitors in 2021, and it has successfully attracted tourists from new and emerging markets to supplement traditional ones like India and Russia. The Maldives is also working to diversify its economy beyond tourism, with a focus on expanding the fisheries and establishing a decentralized network to provide public services. The country is also working on initiatives that factor in its nature and health and wellness tourism, as well as promoting sustainable and nature-friendly tourism. The Maldives’ dependence on tourism and limited sectoral diversification remain key structural challenges, and the country faces risks from commodity price volatility, high debt levels, and external financing needs. While the global tourism sector outlook is robust, reforms are needed to improve the fiscal outlook and ensure debt sustainability. The Maldives’ heavy reliance on tourism and limited sectoral diversification remain key structural challenges, and the country faces risks from commodity price volatility, high debt levels, and external financing needs. While the global tourism sector outlook is robust, reforms are needed to improve the fiscal outlook and ensure debt sustainability.
