The Asian Development Bank’s Asian Development Outlook (April 2026) projects a sharp slowdown in Maldives’ economic growth due to the ongoing conflict in the Middle East, which is affecting tourism, raising energy costs, and tightening fiscal and external buffers. Growth is expected to fall significantly to 1.0% in 2026 from 5.4% in 2025, before gradually recovering to 3.0% in 2027 as tourism stabilizes and oil prices normalize, supported by continued fiscal consolidation. Inflation is also projected to rise to 5.0% in 2026, mainly driven by increased import costs.
Despite Maldives successfully repaying its sukuk in April, the ADB highlights persistent economic challenges, including pressure on the national budget due to reduced tourism revenue and higher fuel prices. While tourist arrivals increased in 2025 following the opening of the new Malé airport terminal, visitor stays were shorter, and future arrivals in 2026 are expected to grow more slowly amid ongoing geopolitical uncertainty.
The report also notes that Maldives’ external buffers remain very limited, with foreign reserves improving in 2025 due to stronger tourism receipts and tighter foreign exchange controls but weakening again after debt repayment. Fiscal conditions remain strained, as public debt stays close to 130% of GDP despite earlier deficit reductions through capital spending cuts, while rising energy subsidy costs and weaker tax revenues further pressure government finances, leaving limited room for external financing support.
