Update Country Report Maldives 09 Dec 2020

Event

According to data published by Maldives Immigration (a government agency), 35,759 tourists visited Maldives in November, up from 21,515 in October. In year-on-year terms, however, this was still down by 74%.

Analysis

The number of tourists arriving in the Maldives has been rising steadily since the country re-opened its borders in mid-July, following an almost four-month-long nationwide lockdown. The upward momentum recorded in November continues to be driven by a strong pick-up in visitors arriving from Russia (accounting for almost one-quarter of the monthly total). The number of tourists arriving from India has also grown significantly with the bilateral air bubble coming into effect. Elsewhere, tourist arrivals from the UK, the US, Germany and the UAE grew at a healthy pace and contributed significantly to the monthly total. By contrast, the number of visitors from China, which has traditionally been the largest source of tourists to the archipelago, has yet to pick up, owing to international travel restrictions in that country.

The Maldivian Ministry of Tourism remains optimistic regarding the sector's recovery, estimating that tourist arrivals will total 500,000 in 2020, which is broadly in line with The Economist Intelligence Unit's view. Total visitor arrivals in January-November have reached almost 459,000, making the target achievable. That said, the traditional boost to the tourism sector from Europe, India and the US during the peak holiday season is likely to be less prominent this year, owing to continued apprehension regarding international travel.

Nonetheless, we expect tourist arrivals to continue to recover in the coming months, aided by a resumption of flight connectivity, with more source countries and a gradual global recovery bolstering international travel. Ongoing promotional activities by the Maldivian government and other tourism-related agencies, coupled with relatively tourist-friendly protocols for incoming visitors, will ensure that the Maldives remains an attractive destination for global holidaymakers.

Impact on the forecast

The latest data support our view that overall tourist arrivals in 2020 will be around 70% lower than in 2019. Given this sector's enormous contribution to the Maldivian economy, we maintain our estimate that real GDP will shrink by 29.5% in 2020. We expect economic growth to bounce back to 21% in 2021, led by a gradual recovery in the tourism sector.