Update Country Report Maldives 07 Jan 2021

Event

According to data released by a government agency, Maldives Immigration, 96,411 tourists visited the country in December, up nearly threefold from 35,759 in November. In year-on-year terms, however, this was still down by 43.7%.

Analysis

The significant jump in the number of tourists visiting the Maldives in December was driven by a healthy inflow of holidaymakers from India, who accounted for 19% of total arrivals, ahead of Russia (16%) and the UK (15%). In 2020 as a whole, 555,399 tourists visited the Maldives, marking a slow but steady recovery in the country's tourism sector since the reopening of borders in mid-July. The Economist Intelligence Unit had estimated that tourist arrivals in 2020 would be 70% lower than in 2019, and the actual contraction of 67% was broadly in line with our estimate.

December tends to be a peak tourism season for the Maldives, owing to the celebration of Christmas and New Year holidays in most parts of the world. This trend was evident in December 2020, with almost 60,000 tourists arriving in the second half of the month. Interestingly, the emergence of a new and more transmissible variant of the coronavirus (Covid-19) did not seem to deter visitors from the UK. However, with that country going into a nationwide lockdown from January 4th until at least mid-February, tourist arrivals from the UK will dry up in the coming months. Furthermore, the seasonal boost around Chinese New Year, celebrated in February this year, will also be muted, as those traveling out of mainland China will be subject to quarantine on their return.

We expect tourism activity to continue to pick up in 2021, but its pace will be moderated by prevailing restrictions on foreign travel, as well as uncertainty over quarantine rules upon returning (at least in the short term). While global vaccine roll-outs and favourable initiatives by the Maldivian government, such as the recently launched loyalty programme for visitors, will help to attract tourists and reduce hesitancy over travel, arrivals in the Maldives are unlikely to return to pre-pandemic levels in 2021.

Impact on the forecast

The latest data were in line with our expectations and do not warrant a change to our forecasts. We continue to expect economic growth to bounce back by 21% in 2021, led by a sustained recovery in the tourism sector.