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 forecast period and ongoing efforts to extend the country's shipments of fisheries (the main export commodity) to Russia and China will underpin a recovery in goods 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, services exports from tourism (accounting for 90% of total services credits) have consistently exceeded services debits. We expect these exports to exceed their pre-pandemic (2019) levels this year, supported by a swift revival in tourism activity-the country remain a leading destination for luxury tourism.

The current account will remain firmly in deficit in 2022-23, as the services surplus will be insufficient to offset the goods trade deficit. However, the shortfall will widen from an estimated 9.9% of GDP in 2021 to the equivalent of 19.4% of GDP by end-2022, owing to higher import costs. The primary and secondary income accounts will remain in deficit in 2022-23, reflecting high interest payments and negligible remittance inflows.