The value of merchandise imports dwarfs that of exports, and the country has historically run a wide deficit on its goods trade account. The deficit narrowed considerably in 2020 as imports plummeted on the back of subdued domestic activity, but we expect it to widen once again to historical levels in 2021-22. A strengthening of external demand over the next two years and ongoing efforts to extend the country's fisheries exports (the main export commodity) to Russia and China will underpin a bounce-back in exports. This will be overshadowed by a recovery in domestic activity and global oil prices fuelling the import bill, the size of which will continue to exceed exports by a wide margin.

By contrast, the Maldives' tourism services exports (accounting for 90% of total services credits) have consistently exceeded services debits, keeping the services balance in surplus. An anticipated recovery in tourist arrivals in 2021-22 will enlarge the services surplus further, but it will be insufficient to offset the goods trade deficit.

The primary and secondary income accounts will remain in deficit over the forecast period, reflecting high interest payments and negligible remittance inflows. Given the prevalence of existing trends, the current account will remain in the red in 2021-22, but rising tourism receipts will result in a narrowing of the deficit to the equivalent of 21.9% of GDP on average in 2021-22, from an estimated 26.1% of GDP in 2020.