World bank has released a report stating that the expected productivity growth rate has declined compared to the previous estimation owing to the preference of tourists on cheaper guesthouses over high-end resorts.
World Bank has lowered their productivity growth forecast for this year due to the demand in tourism shifting from resorts to guesthouses in Maldives.
The most recent South Asia Development Update report released by the World Bank had estimated a productivity growth of 4.7 percent in the country this year.
However, this estimation reflects a 0.5 percent decrease from the previous forecast, the report said.
While the report indicated that productivity growth is expected to decline more than the estimated percentage due to changes in the tourism industry, the World Bank revealed that this estimated decline is attributed to tourists opting for cheaper guesthouses for their vacations rather than high-end resorts.
However, the report stated that the productivity growth will increase by 5.2 percent in 2025 if the development of Velana International Airport is concluded within the year.
While tourist arrival rate is expected to increase after the completion of the project, World Bank forecasts that the current account deficit will reach 20 percent of GDP and the fiscal deficit will reach double digits in 2025.
In addition, while the state's debt to GDP ratio is expected to increase, the World Bank reiterated concerns about sustainable repayment of debts.
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