The value of merchandise imports dwarfs that of exports, and the country has historically run a wide deficit on its goods trade account. We expect the trade deficit to widen in 2022-23, inflated further by elevated global oil prices. The strengthening of external demand over the next two years and ongoing efforts to extend the country's shipments of fisheries (the main export commodity) to Russia and China will underpin a recovery in exports. This will, nonetheless, be overshadowed by resurgent tourism activity in the islands that will fuel the import bill, the size of which will continue to exceed exports by a wide margin.

By contrast, the Maldives' services exports from tourism (accounting for 90% of total services credits) have consistently exceeded services debits. These exports are expected to grow beyond their 2019 levels by end-2023, with the Maldives emerging as a leading destination for luxury tourism. However, the services surplus will be insufficient to offset the goods trade deficit.

The current account will remain in the red in 2022-23, but rising tourism receipts will result in a narrowing of the deficit to the equivalent of 19.4% of GDP by end-2023, from an estimated 20.4% of GDP in 2021. The primary and secondary income accounts will remain in deficit over the forecast period, reflecting high interest payments and negligible remittance inflows.