Update Country Report Maldives 27 Apr 2020

Event

Containment measures will stay in place until end-April. The greater Malé region, which includes the Maldives capital, Malé and adjoining suburban districts of Hulhumalé, Villingili, Thilafushi and Gulhifalhu, have been under lockdown measures since April 15th.

Analysis

Initially, a 24-hour lockdown had been imposed in the region on April 15th after the first case of local transmission of the infection was detected. This was further extended by another 24 hours and on April 17th extended by a further two weeks. During this time, people are not allowed to venture out of their homes, except to purchase essential items or to use emergency services. At the same time, entry into or exit from the islands has been barred. Public transport services will also remain shut under these measures.

Although the first case in the Maldives was detected in early March, the spread of infection had, for several weeks, been contained. In the week of April 13th-19th, the number of confirmed cases jumped from 20 to 52. As of April 20th, 67 confirmed cases had been recorded, with 15 new cases being detected in one day. Out of the 67 total cases, 31 are in Malé.

The lockdown measures will bring domestic economic activities to a near-standstill. The archipelago's economy has already been severely hit by the disruption to tourism activity, the main driver of economic growth, in the wake of the coronavirus epidemic. Government restrictions on foreign arrivals, coupled with widespread wariness about international travel, are hurting the industry. Although the less affected regions have still not come under a complete lockdown, most hotels, guesthouses and resorts across the country have been shut down.

There is also the possibility that complete lockdown measures could be implemented in other regions of the country, if they also show sudden surges in the number of infected persons. Moreover, as has been the case in neigbouring India, if a 14-day shutdown proves ineffective and insufficient to control the spread of infection, the government could further extend the lockdown.

Impact on the forecast

In line with an anticipated decline in services sector earnings in 2020, which accounts for nearly 75% of GDP, we expect the economy to contract by 4.3% in 2020. In view of the latest developments, we will revise the real GDP growth forecast for 2020 to show a slightly deeper recession than currently anticipated.