Fish and fish products are Maldives' only major export commodities, while the bulk of domestic demand is met by imports of consumer and capital goods. Imports, therefore, far outweigh exports in value terms, and the country runs a wide deficit on the merchandise trade account. Amid an expected rebound in external demand and the government's ongoing attempts to extend Maldives' fisheries exports to Russia and China, we expect merchandise exports to bounce back in 2021-22, after contracting in 2020. Meanwhile, a rebound in domestic demand and continued investment spending on construction undertakings will fuel the import bill, keeping the merchandise trade balance in the red in 2021-22.

On the services front, tourism accounts for almost 90% of the total value of exports, and has consistently outweighed imports to keep the services balance in surplus. A gradual return of tourists to the archipelago during the forecast period will keep the services balance in the black, but we expect it to be insufficient to offset the goods trade deficit. With the primary and secondary income accounts remaining in deficit, we forecast that the current account will remain in the red in 2021-22. Nonetheless, in light of higher fisheries exports and tourism earnings, we expect the current-account deficit to narrow to the equivalent of 23.2% of GDP in 2021, from an estimated 27.9% of GDP in 2020.