The World Bank has raised its forecast for the economic growth of the Maldives as the tourism industry is recovering faster than expected this year.
Maldives Development Update (MDU) of the World Bank forecasted the economic growth of the Maldives to be 12.4% which is 4.8% higher than the estimate earlier in the year. The reason is due to the tourism industry recovering faster than expected. Additionally, the gross domestic product (GDP) growth is expected to average 8.1% in 2023-2024 as tourism is expected to support economic activity.
The report noted domestic inflation continues to rise due to rising global commodity prices, negatively affecting the fiscal position and capacity of the state although the economy is recovering rapidly due to the tourism revival. The report also noted that rising commodity prices in the world market have put pressure on domestic inflation, government finances, and balance of payments. The World Bank has forecast that recurrent expenditures will remain high due to a subsidy programme for staples and oil. Consequently, an improved, deserving-only subsidy programme has been recommended to reduce the overall financial burden.
The World Bank report forecasted inflation in the South Asian region to reach 9.2% due to rising global food and energy prices, as well as trade woes and food insecurity in the region.