Update Country Report Maldives 09 Aug 2021

Event

Data published by a government agency, Maldives Immigration, show that tourist arrivals in the country surged by 81.3% month on month in July, to 101,188. The number of visitors so far in 2021 has already overtaken the level of around 555,000 in full-year 2020.

Analysis

The development reinforces The Economist Intelligence Unit's view that the Maldives is well placed to emerge as a preferred travel destination in 2021-22. Although outbound tourism from China (a leading source of tourists for the archipelago) will remain depressed over this period, visitors from India (another traditional source) are expected to return in strong numbers after the Maldivian government eased its immigration policy towards that country in mid-July.

Visitor arrivals from Europe (particularly Russia) and the Middle East are also expected to remain strong, as the "one island, one resort" set-up of the Maldives and its impressive domestic inoculation programme (with more than 50% of the population and 80% of resort employees fully vaccinated) make it a preferred destination for a relatively safe holiday. For 2021 we forecast a doubling of inbound tourism from its 2020 level, although this would still fall below the authorities' target of 1.5m visitors.

The surge in tourist arrivals in July was attributable to a sustained decline in the domestic caseload of Covid-19 infections in the preceding month. Local curfews were lifted in early July, prompting various countries to take the Maldives off their lists for restricted travel. Notably, average tourist arrivals from India were almost 20 times higher during the second half of July than in the first half, reflecting a strong rebound following the government's decision to open its borders to India (and South Asia more broadly) on July 15th. Nevertheless, Russia remained the top source of visitors to the Maldives, accounting for 17.5% of total arrivals that month.

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 remain smaller than it was in 2019.