MMA- Detailed Outlook for 2020

Tuesday 5th of May 2020

MMA- Detailed Outlook for 2020

Maldives Monetary Authority (MMA) Annual Report 2019 published on 30th April 2020 includes a detailed outlook of the year 2020. Apart from this, it covers the policies adopted by the MMA during the year 2019 to achieve its main objectives, and the activities and developments of the MMA for the year 2019.

Following a strong growth during the previous year, the growth prospects for the Maldivian economy appear dreary for 2020 amid the ongoing COVID-19 pandemic. The COVID-19 pandemic is expected to have a severe impact on the tourism sector and related sectors causing significant decline in the foreign currency earnings of the economy. However, with the expected decline in imports and outbound travel expenses, the current account deficit is projected to improve during 2020.

According to the projections made in April 2020, based on data available as of the projection cut-off date, real GDP growth is expected decline sharply in 2020—a major fall from the 7.5% growth projected for 2020 pre-COVID-19 crisis—due to a significant decline in tourist arrivals as well as the fall in domestic demand.

According to projections made preCOVID-19 crisis, the rate of inflation was forecast to revert to the trend level of 1.0% in 2020. However, the impact of COVID-19 on inflation remains highly uncertain. There is chance that a potential shortage in the supply of foreign currency in the economy, may lead to an increase in prices of imported goods, increasing the inflationary pressure in the economy.

The recovery of the domestic economy depends heavily upon the recovery the of tourism sector, which in turn would be dependent upon the reduction in the severity, spread and magnitude of the pandemic.