Fitch Ratings has raised concerns over a possible delayed negative effect on Maldivian tourism after the 45-day state of emergency that was declared in early February.
The Hong Kong-based credit ratings agency raised the concern in the report released last Tuesday, in which the agency maintained the B+ rating it assigned the Maldives last year May.
Fitch suggested that the travel advisories, which were issued by several nations to the Maldives during the emergency in February and March, might have negative repercussions on tourism later. The agency noted that the widely accepted perception of the Maldives as a peaceful destination might have been altered.
The report stated that the Maldives might consequently see a drop in tourist bookings in the future, though Fitch added that cancellations of high-priced prebookings would be unlikely.
The agency went on to estimate that the Gross Domestic Product (GDP) of the Maldives would drop from last year's 6.9 percent to 4.5 percent this year, while the projection for 2019 is estimated at five percent.
Fitch also stated that the generation of revenue from the tourism sector might experience a decline this year. While it noted that the current statistics did not indicate a decrease in tourist arrivals yet, the agency said that only future statistics could affirm whether the numbers could be maintained.
The report further highlighted that, though the tourism industry would not experience an abrupt loss, unprecedented developments such as the emergency would negatively impact the nation's economy. Fitch Ratings warned that such changes could result in damages of a magnitude akin to that of the Indian Ocean tsunami in December 2004, which devastated the coasts of South and Southeast Asia. The GDP of the Maldives had experienced a 13 percent drop the following year.
Moreover, Fitch Ratings had raised concerns over the Maldivian economy's heavy dependency on the tourism sector.
In a statement issued in response to the report, the Ministry of Finance and Treasury said, "The government acknowledges these challenges and remains ready to tackle them. As such, economic diversification is a primary objective of the foreign investment policies and urban development policies that the administration had pursued in the past years."