Update Country Report Maldives 10 Nov 2020

Event

On November 8th Maldives Immigration (a government agency) published data showing that 21,515 visitors arrived in the country in October, compared with 9,538 recorded in September. However, this was still down by 84.8%, year on year.

Analysis

The majority of tourists in October arrived from Russia (accounting for around 28% of the monthly total), followed by Western Europe and the US. There was also an increase in tourists arriving from the Middle East, particularly from the UAE. The improvement is partially reflective of the country's ongoing efforts to resume tourism activity in the islands. Since the reopening of borders on July 15th, Visit Maldives and Maldives Marketing and Public Relations Corporation (MMPRC) have increased their promotional activities worldwide to attract more tourists. In recent months, Visit Maldives has run several campaigns on various platforms in Russia, the UK, South Korea, the Middle East, France and Germany. Furthermore, MMPRC has launched new campaigns in the Middle East to complement its ongoing "Rediscover Maldives" global campaign.

The MMPRC has also stepped up its promotional activities (including webinar series, online roadshows, targeted advertising campaigns on matrimonial websites and social media engagements) in China and India, the traditional sources of tourism inflows for the Maldives. Despite these efforts, arrivals from India and China have failed to rebound significantly to date, recording year-on-year declines of 69.5% and 85.3%, respectively, in October. Foreign travel restrictions in China and high caseloads in India continue to hold back visitors from these countries. Furthermore, the re-imposition of nationwide lockdown measures amid rising coronavirus cases in many European countries will dent the winter rush from Western Europe.

Nonetheless, the Maldives' Ministry of Tourism remains optimistic regarding the sector's recovery, estimating that tourist arrivals will total 500,000 in 2020. The current tally stands at 423,229 visitors as at end-October, implying that at least 76,771 visitors will need to visit in the remaining two months for the target to be met. Even if this happens, there would still be 70% fewer tourist arrivals in 2020 than in 2019.

Impact on the forecast

Factoring in the impact of suspended tourism on services earnings, which accounts for nearly 75% of GDP, we estimate a 29.5% contraction in real GDP in 2020. We expect the Maldivian economy to stage a partial recovery of 21% in 2021 and 10% in 2022, led by a gradual recovery in tourist arrivals.