Economic Minister warns GDP could fall by 11 percent

Economic Minister Fayyaz Ismail.

Economic Minister Fayyaz Ismail has projected that the Maldivian economy’s GDP could fall by as much as 11 percent in 2020. 

Speaking in a program of PSM, Minister Fayyaz said that a growth of 7.5 percent was projected for the economy previously, however, due to the strains of COVID-19, the Minister said that the economy has stopped.

The Minister described the hardships faced by the world today, as the biggest since the end of the second world war.

The Minister noted that the strain on the Maldivian economy, which is dependent on the tourism industry, was also high.

“We are facing difficulties in obtaining dollars. Borders of many countries are closed and the majority of the currency that comes into the Maldivian economy comes from the tourism industry. The economy has stopped since tourists cannot come from these borders. We are mostly dependent on tourism.” Said the Minister. 

Around a million had visited the country by July last year while before the borders of the country were closed in March this year, the country had received 380,000 tourists. After the borders of the country reopened, the country had received 2,700 tourists. The Minister noted that the Maldives the number of tourist arrivals this year was three times lower on average when compared with the period before borders closed last year.

“When COVID-19 didn’t exist, we projected a GDP growth of 7.5 percent. Now we project a fall of 11 percent which is a lot.” Said the Minister before noting that this was something unprecedented for the nation. 

“We can estimate that the situation will be dire until we receive a vaccine. It will take time to revert back to where we were. The next six to eight months will be difficult. The chance to slowly return to a normal is there. After maybe a year and a half, maybe we can reach a good place.” Said the Minister. 

The Minister estimated that after COVID-19, the Maldives could only reach where it was a year ago in terms of the economy, in 2022. The tourism industry could not be suddenly developed and the Minister noted that the development of other industries were also being prioritized. 

“The challenge is that tourism was the only strong sector.” Said the Minister who added that work to diversify the economy was also underway now.