Given the dominant role of tourism in the Maldivian economy, real GDP growth in 2021-22 will be tied closely to resumption of international travel, which, in turn, will depend largely on lower travel hesitancy and an easing of quarantine requirements upon return. Vaccination programmes in major tourist source markets (like India and China) will help to alleviate these concerns but achieving mass vaccination will be a prolonged and staggered process, keeping tourist arrivals below pre-pandemic levels over the forecast period. In the interim, the bilateral travel bubble with India (one of the main sources of tourism for the Maldives) and relatively friendly tourism protocols in the islands (including the government's commitment to prioritise vaccinating airport and resort staff) will ensure that the country remains an attractive destination for international holidaymakers.

Following an estimated contraction of 29.5% in 2020, we expect the economy to recover to 23.2% in 2021, reflecting a gradual revival of domestic activity and a more than doubling of tourist arrivals from their level in 2020, at the very least. In 2022 we expect real GDP growth to slow to 11%, but this will still be faster than the pre-pandemic average, as we expect widespread vaccination to produce above-average momentum in tourist arrivals in that year. Despite double-digit growth rates, we expect real GDP to remain marginally below its 2019 level by the end of the forecast period.