The overall economic growth rebounded in 2021 due to strong recovery in the tourism industry of Maldives according to the most recent Asian Development Outlook.
The survey conducted by Asian Development Bank (ADB) identified that the significant increment in tourist arrivals; as well as the overall growth in the tourism sector paved way for a GDP growth increment by 31.6 percent last year.
Affiliated sectors of tourism had also grown strongly, reversing the 2020 contractions, which includes transportation and communication, financial services, and retail trade.
Meanwhile, construction industry weakened, and shrunk by 7.4 percent mainly due to the constraints on supply-chain as well as bank finance stagnancy for the construction industry.
Tourist arrivals on the other hand, rose to 1.3 million in 2021 compared to just 555,494 in 2020, which was a 138 percent growth.
Arrivals from Europe rose by 121.7 percent last year, accounting for 55.3 percent of the growth in arrivals, while 58.4 percent share of the total arrivals - making the region, the largest regional market to the Maldives in terms of tourist arrivals.
On the other hand, arrivals from Asia rose by 150.6 percent following a 79.7 percent decline in 2020.
India was the leading single source market from the Asian regional market, which was up by 363.4 percent in 2021, and Asian market accounted for the second-biggest share with 25.5 percent.
Bed-nights observed a growth of 149.1 percent in 2021 compared to the year before, amounting a total of 9.9 million. Preliminary estimates indicate travel receipts had risen by 148.5 percent after dwindling to 55.7 percent in 2020.
Moreover, tourism rebound produced a surge in revenue that lowered the budget deficit from the equivalent of 23.5 percent of GDP in 2020 to 16.6 percent in 2021.
Additionally, half of the budget deficit originated from government securities and the Parliament's decision of extending an overdraft facility from Maldives central bank.
By the end of 2021, public debt including state-guaranteed debt increased by 8.7 percent to MVR9.1 billion, which translates to 122.2 percent of the GDP.
External debt rose by 2.2 percent to MVR45.5 billion - which is 58.4 percent of the GDP - owing majorly to sukuk issuances.
Domestic debt stretched by 15.5 percent to MVR49.1 billion which was 63.8 percent of the country's GDP.
In 2021, government expenditure grew by 13.0 percent to reach a total of 42.2 percent of the Gross Domestic Product. This increment came from a 16.9 percent surge in the recurrent spending mostly concentrated for grants, subsidies, and health insurance.
Capital expenditure however, dropped by 2.8 percent largely on part due to supply-chain disruptions and Covid-19 containment measures.
Meanwhile, total state revenue rebounded by 29.3 percent in 2021, to reach a 25.6 percent of the GDP. This rise was attributed to the significant bump in the increment in goods and services tax (GST) from tourism and the surge in rent from resorts.
Despite observing robust growth in all economic sectors in an overall nature, the Russian invasion of Ukraine has created uncertainty over the prospects economic growth in 2022.
Due to the sanctions against Russian Federation, tourist arrivals to the Maldives, are expected to fall sharply during 2022.
Moreover, the total arrivals are forecast to fall by 10.0 percent in the current year in comparison to previous year's levels.
Meanwhile, tourist arrivals in the first two months of 2022 pierced up to 48.6 percent from the same period in 2021.
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