Given the dominant role of tourism in Maldives, economic growth in 2021-22 will be closely tied to improvements in international travel and tourism expenditure, which, in turn, will depend largely on rising personal disposable incomes and higher appetite for discretionary spending. While an anticipated rebound in economic growth in the country's key sources of visitors-EU, China and India-in 2021 will support recovery in tourism receipts, we expect tourist arrivals to pick up only gradually in the forecast period, as restrictions on foreign travel, as well as quarantine rules upon returning, will remain uncertain in the near term.

Following an estimated contraction of 29.5% in 2020, we expect the economy to stage a partial recovery of 21% in 2021, on account of continued construction undertakings and a gradual revival in economic activity, aided by modest increases in tourist arrivals. In 2022 we expect growth to slow to 10.7%, but this will still be faster than the pre-pandemic average, as we expect growth in tourist arrivals to gain momentum in the latter half of that year. Despite double-digit growth rates, we do not expect real GDP to return to 2019 levels in the forecast period.