Governor of Maldives Monetary Authority (MMA) Ali Hashim declared that local economic growth might reach negative nine percent in the estimated worst case scenario of the economic recession caused by the global COVID-19 pandemic.
Speaking to local media Mihaaru about the Maldivian economy, Governor Hashim disclosed that MMA has now identified the possible effects to the economy and shared the likely scenarios with Ministry of Finance and the Public Finance Committee at the parliament.
The "worst case scenario" is that the whole country stays under lockdown until the last quarter of the year, with no tourist arrivals. According to the Governor, a solution must be found in the tourism sector to improve the country's economic growth, as 30 percent of direct revenue and 60 percent of indirect revenue is generated by this industry alone.
"A vaccine for this disease [COVID-19] is expected to be available in 2021 at the earliest. As per the current information, it is crucial to continue our lives by implementing preventive measures at the time of this pandemic", he said.
Hashim further noted the importance of reforming every sector to boost the economy. He also added that Maldives will need to depend on financial aid from international parties to overcome this economic slump.
The Asian Development Bank (ADB) speculated that Maldives' economic growth will fall to negative three percent in the financial recession caused by the pandemic. However, the bank estimated that the economy will stabilise and see a growth of 7.5 percent the next year, with an increase in inflation from 1.0 percent in 2020 to 1.2 percent in 2021.
The Maldivian government has implemented several preventive measures to contain the spread of COVID-19 in the country, including a temporary halt in issuing on-arrival VISA. This safety measure coupled with the fact that most countries have suspended international flights, means that there are no tourist arrivals.
Therefore, the tourism industry is currently experiencing the most drastic decline ever recorded in the country's history.
The largest hit taken by the Maldivian economy in the recent times was caused due to the "Global Financial Crisis" in 2009, resulting in an economic growth of negative 6.6 percent.
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