Fish and fish products are the country's only major export commodities, while the bulk of the country's domestic demand is met by imports of consumer and capital goods. The value of imports is therefore far greater than the value of exports, and the country runs a wide deficit on the merchandise trade account. Goods exports rose by 13% year on year in US dollar terms in January-October 2019 (latest data from the MMA) and imports declined by 3.5%. However, the goods trade account will remain in deficit during the forecast period.

Tourism accounts for almost 90% of the total value of services exports. Tourist arrivals grew at a strong pace of 15.4% year on year in January-October 2019. Although the services trade balance has consistently recorded a surplus and is expected to continue to do so in the forecast period, this will be insufficient to offset the merchandise trade deficit. With the currency remaining fixed at an overvalued level and the primary and secondary income accounts remaining in deficit, we forecast that the current account will remain in deficit in 2020-21. However, we expect the shortfall to be narrower during this period compared with 2018-19, averaging the equivalent of 12.2% of GDP a year in 2020-21, compared with 25.6% of GDP in 2018-19, as weaker domestic demand will lower the import bill.