Given the dominant role of tourism in the Maldivian economy, real GDP growth in 2021-22 will be tied to closely improvements in international travel and tourism expenditure, which, in turn, will depend largely on lower travel hesitancy and higher appetite for discretionary spending. While the global rollout of vaccination programmes will help to reduce anxiety over travel, achieving mass inoculation will be a prolonged process and will keep tourist arrivals in 2021 below the level reached in 2019. In the interim, the bilateral travel bubble with India (one of the key sources of tourism for the Maldives) and relatively friendly tourism protocols in the islands will ensure that the Maldives remains an attractive destination for global holidaymakers.

Following an estimated contraction of 29.5% in 2020, we expect the economy to stage a recovery of 21% in 2021, reflecting a gradual revival of domestic activity and an expected doubling of tourist arrivals from their level in 2020, at the very least. In 2022 we expect real GDP growth to slow to 10.7%, but this will still be faster than the pre-pandemic average, as we expect growth in tourist arrivals from developed economies to gain momentum in that year. Despite double-digit growth rates, we do not expect real GDP to return to its 2019 level in the forecast period.