Update Country Report Maldives 19 Mar 2019

Event

Data released by the Ministry of Tourism showed that international tourist arrivals were up by 6.5% year on year in January.

Analysis

The pace of growth in tourist arrivals slowed only slightly compared with the 6.8% increase in full-year 2018. The trend in January continued to be driven by a healthy rise in the number of visitors from Europe, who account for about half of total tourist arrivals. Among European countries, Italy, the UK and Germany accounted for the highest shares of tourist arrivals. On a national basis, China remained the largest single source of visitors, accounting for 17% of total tourist arrivals, followed by India (7.7%).

In recent years the government has increased its emphasis on tourism promotion, making tourism activity one of the main drivers of economic growth in the country. Tourism receipts have helped the economy to record healthy surpluses on the services trade account. These partly offset the large shortfalls on the merchandise trade account and contribute towards keeping the current-account deficit contained.

We believe that growth in tourist arrivals will slow during 2019-20. The new government's difficult relationship with China, coupled with slower economic growth in that country, will cause Chinese tourist arrivals to stagnate and possibly even decline. This will, however, be offset by robust growth in tourist arrivals from India and other markets (mainly European countries).

Impact on the forecast

The latest tourism numbers support our forecast that services exports will rise by 5.3% in 2019.