Update Country Report Maldives 07 Sep 2021

Event

Data published by a government agency, Maldives Immigration, show that tourist arrivals in the country surged by 41% month on month in August, to 143,599. This was nearly 3% higher than the number of visitor arrivals in August 2019, before the coronavirus pandemic.

Analysis

The data were in line with The Economist Intelligence Unit's forecast that the Maldives will emerge as a preferred tourist destination in 2021-22 as rival destinations struggle to reopen their borders for short-term travel. For 2021 as a whole we continue to expect a doubling of inbound tourism, from around 555,000 in 2020. This is expected to lift the Maldivian economy out of recession and to deliver real GDP growth of 18.6%.

The Maldives' impressive vaccination programme (with 57% of the population and 92% of resort employees fully vaccinated by the end of August) has prompted various countries to take the archipelago off their restricted-travel lists since July. This has been complemented by the authorities' accommodative immigration policy of granting a 30-day visa on arrival with no mandatory quarantine requirement, upon presentation of a negative Covid-19 test taken in the previous 96 hours. The country's "one island, one resort" set-up is also suited to natural social distancing and safe holidaying.

Almost two-fifth of visitors in August were from India-traditionally a leading source of tourists for the Maldives. This was aided by the bilateral travel bubble in operation between the two countries, bolstered by the growing trend of white-collar Indian expatriates using the Maldives as a quarantine "country of transit" en route to renewing their visa in their overseas work destination. Visitor arrivals from Europe (particularly Russia) and the Middle East also remained strong in that month. Meanwhile, tourism from China (another traditional source) remained effectively suspended owing to the strict quarantine requirements imposed on returning nationals in that country. We expect all of these trends to persist over the remainder of this year.

Impact on the forecast

We maintain our forecast that an anticipated doubling of tourist arrivals in 2021 will lift the Maldivian economy out of recession and deliver real GDP growth of 18.6%. However, despite the double-digit recovery, the economy will still be smaller than it was in 2019.