Despite the negative global headwinds, the Maldivian economy is expected to continue its strong recovery trajectory in 2022 and 2023, states the Maldives Monetary Authority (MMA).
MMA made the remark in its quarterly economic bulletin for Q3 2022, published Thursday.
According to MMA, the Maldivian economy is estimated to grow by 12.3 percent in 2022 and reach pre-pandemic levels of output by the end of 2022.
MMA attributed the robust economic growth projections to the strong performance of the tourism sector during the year.
According to MMA, the incoming high frequency data indicate that the tourist bed nights grew by 33 percent in the first three quarters of 2022 and the sector is expected to register further growth rates in 2023 as well.
As such, the latest forecast by MMA indicates a real GDP growth of 7.6 percent for 2023 which is higher than the average growth rates registered by the Maldivian economy prior to the COVID-19 pandemic.
Meanwhile, activity in the fisheries sector observed mixed developments during Q3 2022.
In Q3 2022, fish purchases made by processing companies fell in annual terms, although the volume of fish exports increased.
In Q3 2022, fish purchases totaled 14,452.0 metric tonnes, observing a decline of 19 percent compared to Q3 2021. MMA attributed this in large part to the 53 percent decrease in purchases of yellowfin tuna and 5 percent decline in purchases of skipjack tuna.
The decline in fish purchases mainly reflected the limited purchases made by fish processing companies owing to the limited storage capacity, despite a better-than-anticipated increase in fish catch from the Southern Region during the quarter, said MMA.
The rate of inflation decelerated to 2.7 percent in Q3 2022 from 2.9 percent in Q2 2022. According to MMA, developments in domestic inflation during the quarter mainly reflected higher prices in most of the major food categories, energy-related items, health, transport services, and services of restaurants and cafés, which offset the decline in cost of information and communication services.
MMA said that the cost of domestic food and energy related items have been steadily increasing, owing to the elevated global food and energy prices, driven by the demand and supply imbalances, and global supply chain disruptions amid the negative spill-over effects from the Russia-Ukraine war.
Meanwhile, total expenditure, excluding debt amortization, recorded an increase of MVR 1.0 billion in annual terms and totaled MVR 8.5 billion during Q2 2022.
According to MMA, this stemmed largely from a significant increase in recurrent expenditure which posted an annual growth of MVR 730.1 million, together with an increase in capital expenditure.
The increase in recurrent expenditure was driven by a substantial increase in administrative and operational expenses, almost entirely due to increased spending on grants, contributions and subsidies.
Subsidies grew by MVR 614.2 million - partly attributed to rising global oil and food prices, which has led to an additional burden on the government budget, amid delays in implementation of the policies envisioned to reduce such expenditure.