Given the dominant role played by tourism in the Maldivian economy, real GDP growth in 2023-24 will be tied closely to activity in this sector. The country's lenient visa procedures and natural separation of resorts from the main island inhabited by locals will continue to underpin its popularity as a top tourist destination in 2023-24. Some momentum behind the sector will be sapped by an anticipated slowdown in global growth and elevated international prices, which will curb travel demand in key markets. The Maldives will also face greater competition than in recent years from other popular destinations, such as Thailand, which have now fully reopened.

Still, we forecast further growth in arrivals in 2023-24, to 1.9m a year on average, from an estimated 1.7m in 2022. Arrivals from India, Europe and the Middle East will provide the main sources, with Russian visitors likely to arrive in weaker numbers owing to the fallout from the war in Ukraine. Arrivals from China, an important source before the pandemic, ought to be on a gradual path of recovery by end-2024 as that country eases its strict covid-19 controls on outbound travel.

We expect work on ongoing infrastructure development projects to pick up pace in 2023-24, although a tightening of fiscal conditions could cause some delays. The completion by end-2024 of the Greater Male Connectivity Project, the largest infrastructure initiative in the country, will be a major development target. It aims to improve connectivity between the capital and its neighbouring islands, supporting growth in transport, tourism and retail trade activity. Improving household earnings and continued subsidy support from the government in the run-up to the presidential election in 2023 will prop up private consumption.