The Edition
facebook icon twitter icon instagram icon linkedin icon


Could Maldives economy be traversing into dangerous waters once again?

Mohamed Rehan
07 December 2021, MVT 10:04
(FILE) Tourists at Velana International Airport, on October 29, 2021: the discovery of the Omicron Covid variant may hinder Maldives' economic recovery projected for the next two years-- Photo: Fayaz Moosa / Mihaaru
Mohamed Rehan
07 December 2021, MVT 10:04

The hot topic currently is the sudden discovery of a new and potentially more contagious variant of the Covid-19 virus, which has effectively forced several global behemoths to actively place fresh impetus on restricting international travel.

Meanwhile, the World Health Organization (WHO) has already announced its projections with regards to the new Covid-19 variant; Omicron due to which many of the European nations are already shutting down their gateways for inbound travelers.

More recently, the Health Protection Agency (HPA) of Maldives confirmed that the Omicron variant was discovered in an inbound traveler to the island nation – confirming the very first positive case of the variant in the country.

The nation has not completely recovered from its last blowback due to the viral pandemic and had only quite recently started to make modest progress towards recovery; but with the confirmation of this new variant already reaching its shores could once again result in a possible regression for the country's economy.

However, while the worst should not be assumed, it is still advisable to always factor in and this leads to the potential question about the prospect of the Maldives economy in the following months; more specifically the possibility of a full economic recovery in the upcoming two years.

Earlier, Finance Minister Ibrahim Ameer speculated that the country will experience faster economic recovery in 2022 and comparatively faster recovery in the following years; 2023 and 2024.

According to the minister, the island nation expects stronger influx of international tourists in the upcoming years which in turn would reflect in the revenue earned within the tourism industry and subsequently to Maldives' government as well.

But with the sudden discovery and vigorous spread of the Omicron variant across the globe may hinder the pace of this said progression; which in turn could stagnate the economic drive of Maldives.

A month-on-month analysis into the top revenue earners to the Maldives government confirm that Tourism Goods and Services Tax (TGST) along with Green Tax remain as the strongest tax based revenue streams to the island nation while rent collected from resorts remain as the strongest non-tax based revenue source. All of which depends on the capacity of tourist arrivals in the country

This was vividly evident in 2020 when revenues earned to the state dropped significantly owing to the low tourist arrivals to the Maldives – which had failed to exceed beyond 560,000.

So, should the new Covid-19 variant manage to hinder the progress made by the Maldives in terms of new travel restrictions or a possible and temporary border closure, or even stricter screening procedures and a potential travel ban on regions with active Omicron cases then the country may stand to suffer considerably in terms of tourist arrivals.

Mostly since Maldives is enjoyed greatly by travelers from the European region, which generally covers 50 percent of all tourist arrivals while Germany and United Kingdom remain among the top five source markets to the nation– both of which are already facing complications in international travel and aviation due to positive Omicron cases discovered from the countries.

At this point it cannot be ascertained whether the upcoming months will have an adversarial or a progressive impact, but it is always best to prepare for any given scenario – which the government of Maldives may already be working on actively.

Share this story