Maldives - Economy

Overview: Maldives is disadvantaged by its small size, the thin scattering of human settlement across atolls spread over hundreds of kilometres of ocean, its distance from centres of economic activity, and the poverty of its coralline soils.

The country has benefited from the support of wealthy Muslim countries, but its steady progress is attributed mainly to its social and economic stability. Since the late 1980s, economic policies combine a liberal economic and investment regime – focused on tourism, fishing, and a growing manufacturing sector – with well-directed social expenditure on education, health and providing essential social infrastructure to the outer islands.

The country does, however, face longer-term constraints through erosion of the friable coral rock of which the islands are built, caused by construction and population pressure. Climate change resulting in rising sea level and greater climatic instability also gives cause for concern as the country is very low-lying.

Nonetheless, it has achieved high and steady rates of growth with low inflation over a relatively long period, based mainly on tourism. GDP grew by 7.8% p.a. 1989–99. In the 2000s, initially growth slowed in response to the international climate, but picked up again in 2002, becoming strong in 2002–04 (9.1% in 2003 and 9.5% in 2004). However, economic infrastructure throughout the country was then devastated by the massive tsunami in late December 2004 and the economy shrank by 5% in 2005. Post-tsunami rebuilding and a rebound in tourism spurred a remarkable recovery in 2006 with GDP growth of 23.5% in 2006 and 5.5% in 2007.

Trade: By far the most significant export is fish products (mainly canned fish and frozen skipjack tuna), followed by clothing. Principal imports are oil, machinery, food and consumer goods. The main export partners are the USA, Sri Lanka and Thailand; the main import partners are Singapore, United Arab Emirates, Sri Lanka and India.