Travelers opt cheap guesthouses, WB revises Maldives economic growth projection

World Bank revised and reduced the economic growth projection of the Maldives.

In its South Asian Development Update, World Bank highlighted tourists visiting the Maldives have begun opting for lower-cost guesthouses instead of high-end resorts.

While World Bank earlier projected an output growth of 5.2% for the Maldives, this has been rectified and reduced to 4.7% in the most recent update.

The World Bank report said this economic condition became prevalent last year when the Q3-2023 economic growth stood at 2% in comparison with 13.9% in the corresponding quarter of 2022.

The report further notes this is the second quarter where tourist arrivals observed significant decline as well.

Additionally, the bank projects a 5.2% economic growth once Velana International Airport's expansion project concludes; which is expected to increase annual arrivals to the Maldives. However, the bank's report emphasized the risks Maldives face owing to higher public spending and debt accumulation; which in turn would drive up the state deficit.

While tourism industry stakeholders and businesses alike coincide over the increment of tourist arrivals, they too, highlight that majority of these travelers have started to choose lower-cost tourism products instead of expensive tourist resorts.

The reduced guest stay is also adversely affecting tourism-related receipts as well, according to industry consensus.

Maldives tourism industry's most notable change this year is the re-emergence of China as the top tourist market since 2019 and the decline of Indian tourist arrivals. As of the most recent upates from the Ministry of Tourism, arrivals from India is around 30,000 in annual terms while the market that rested in the top spot since 2020 has slipped to sixth rank.

This originated after three Maldives senior government officials made derogatory comments against Indian Prime Minister Narendra Modi. Following the heated exchange, Indian netizens and celebrities alike mounted the boycott campaign in favor of tourism in Lakshadweep.

Maldives Marketing and Public Relations Corporation (MMPRC) said it is making efforts to increase Indian arrivals to the Maldives once again.