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Maldives: Infrastructure Investment as an Engine of Growth

Key Information
Population0.39 million
CurrencyMaldivian Rufiyaa (midpoint of exchange rate is 12.85 MVR per USD and the rate is permitted to fluctuate within a ±20% band)
Official languageDhivehi
Form of state


Major Merchandise Export (% of total, 2014)Major Merchandise Import (% of total, 2014)
Agricultural products (43.5%)Manufactured goods (46.3%)
Fuels and mining products (0.9%)Fuels and mining products (30.9%)
Manufactured goods (0.1%)Agricultural products (22.9%)
Top three export markets (% of total, 2014)Top three import markets (% of total, 2014)
European Union (37.0%)United Arab Emirates (23.7%)
Thailand (32.2%)Singapore (17.5%)
US (9.0%)European Union (8.8%)

Sources: Economist Intelligence Unit, the World Trade Organization


Political Highlights

Maldives is a country of about 1,200 islands, most of them uninhabited, in the Indian Ocean. Islam is the official religion. Following a raft of political reforms initiated in 2004 and the ratification of a new constitution in 2008, the president is now chosen directly by the electorate.

However, Mohamed Nasheed, the country’s first democratically elected president, was sentenced to 13 years in prison last year on terror charges. Last September, a state of emergency was imposed for a week, citing threats to national security, following a blast on the president’s speedboat.

The government is embarking on a scale up in public infrastructures such as airport and harbour in order to boost tourism capacity. Near-term challenges facing the government include diversifying the economy and reducing macroeconomic imbalances. Maldives plays a prominent role in international climate change discussions, amid worry about the impact of global warming on the low-lying country as 80% of the country’s area is 1 meter or less above sea level.

Economic Trend

Economic Indicators201320142015*2016*2017*
Nominal GDP
(USD bn)
Real GDP growth
GDP per capita
Budget balance
(% of GDP)
Current account balance
(% of GDP)
Public debt
(% of GDP)

* Estimates
Source: The International Monetary Fund (IMF)


Tourism is the largest economic sector of Maldives, accounting for nearly 30% of GDP and more than 60% of foreign exchange receipts. Tourism contracted by 4% and overall economic growth slowed markedly in 2015, amid concerns about the country’s political situation and security. Growth came largely from robust public investment in infrastructure. Real GDP growth is forecast to rebound to 3.5% this year.

While the mega infrastructure projects could boost the country’s competitiveness in the long term, higher capital spending is set to increase macroeconomic imbalances in the near term by enlarging budget and current account deficits. Financing the infrastructure without prudent capital expenditure management could significantly add to fiscal risks. According to the Asian Development Bank, gross international reserves stood at US$ 564 million at the end of 2015, with import coverage at less than a month.

With a narrow economic base that is largely dependent on tourism, the economy remains vulnerable to external shocks. The government has attempted to promote economic diversification, by introducing special economic zones (SEZs), a high-technology park, and offshore financial services especially in Islamic finance.


Chart: Hong Kong total export to Maldives
Chart: Hong Kong total export to Maldives

Hong Kong-Maldives Trade

Total exports from Hong Kong to Maldives increased by 113.2% from HK$118 million in 2014 to HK$251 million in 2015. The top three export categories to Maldives were: (1) telecommunications, audio & video equipment (+263.6%), (2) electrical machinery, apparatus & appliances, & parts (+133.8%), and (3) photographic apparatus, equipment and supplies and optical goods, nes; watches and clocks (+32.3%), which represented 83.3% of total exports to Maldives.

ECIC Underwriting Experience

ECIC imposes no restrictions on covering buyers in Maldives. The Corporation’s underwriting experience on Maldives has been satisfactory, with no claim payment or payment difficulty case reported from April 2015 to March 2016.


Content provided by Picture: Hong Kong Export Credit Insurance Corporation
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