In July 2021, tourist arrivals increased significantly both in annual terms and monthly terms. The annual increase in tourist arrivals reflected the base effect of the significant drop in arrivals in July 2020 due to the measures taken to curb the spread of pandemic. During the month, the largest number of tourist arrivals were recorded from Russia, followed by India and Saudi Arabia.
The rate of inflation continued to remain below 1% recording 0.9% in July 2021. The upward pressure on inflation was primarily contributed by the growth in the price of dairy products and tobacco. The price of tobacco rose due to additional duties imposed on specific tobacco products in July 2020. On the other hand, the most significant negative contributor was information and communication services during this period.
In July 2021, the volume of fish exports increased significantly when compared with July 2020. This was mainly driven by a significant increase in fresh, chilled, or frozen skipjack tuna exports and increase in exports of other fresh, chilled, or frozen tuna.
Real GDP growth
Real GDP is projected to decline severely by 29.3% in 2020 according to the moderate case growth forecast scenario, underpinned by a sharp decline in tourism sector and related sectors such as wholesale and retail trade; construction and real estate; as well as transport and communication. Going forward, real GDP is projected to grow by 13.5% in 2021.
Total revenue and grants
Total government revenue and grants decreased by MVR8.5 billion (or 37%) to MVR14.7 billion in 2020 when compared with 2019. This reflected a significant decrease in non-tax revenue, followed by a fall in tax revenue as well. Going forward, total revenue and grants is estimated to increase by MVR6.4 billion in 2021 and reach MVR21.1 billion, largely driven by the projected increase in non-tax revenue.
Total expenditure and net lending
Total expenditure and net lending increased by MVR1.6 billion (or 6%) to MVR30.6 billion in 2020 when compared with 2019. This reflected a significant surge in capital expenditure, while current expenditure observed a slight reduction during the year. Going forward, total expenditure and net lending is estimated to increase by MVR2.9 billion in 2021 and total MVR33.4 billion, largely driven by the projected increase in capital expenditure.
Overall fiscal balance in percent of GDP
The overall fiscal balance in percent of GDP widened to -27.5% in 2020 from -6.6% in 2019, driven by the sharp reduction in revenue during the year. However, the overall fiscal balance is projected to improve to -18.5% of GDP in 2021, reflecting the projected recovery of revenue for the year.
Annual broad money (M2) growth stood at 21% at the end of July 2021, unchanged from 21% registered during June 2021. This was primarily driven by an increase in quasi money, owing to a substantial increase in transferable deposits denominated in foreign currency and time deposits denominated in local currency, followed by an increase in savings deposits denominated in local currency. However, a decline was observed in both time and savings deposits denominated in foreign currency. Meanwhile, narrow money also observed a notable increase, owing to a substantial increase in transferable deposits.
Credit to private sector
The annual growth of credit to the private sector by the commercial banks remained unchanged at 9% at the end of July 2021. Meanwhile, the monthly growth in credit to the private sector increased marginally to 1.2% at the end of July 2021. Similar to the previous month, growth rates were observed for most major sectors, namely tourism, construction, transport and communication and real estate, except for commerce. Likewise, credit extended as personal loans observed a significant increase over the period.
Overnight deposit facility (average)
During August 2021, average Overnight Deposit Facility (ODF) placements remained at MVR 4.1 billion. This marked a growth of 7.4% in annual terms, largely reflecting the increase in local currency liquidity due to monetization.
Official reserve assets
Official reserve assets increased to US$874.27 at the end of August 2021 from US$857.13 at the end of July 2021 recording an increase of 2%. In annual terms, official reserve assets observed a growth of 53% during this period.
Total exports (F.O.B) observed an annual increase of 20% in July 2021 when compared to July 2020, while in an increase of 8% was recorded in monthly terms. Fish exports increased by 9% in July 2021 compared to the previous month, while re-exports increased by 12% during this period.
Total imports (C.I.F) increased by 45% in annual terms in comparison to July 2020. Meanwhile in monthly terms a 7% decline in total imports can be observed, which may be contributed by the decline in imports of electronic and electrical appliances; petroleum products; and transport equipment and parts. On the other hand, imports of machinery and mechanical appliances and parts increased by 44% compared to June 2021.
Export of goods and service
In 2019, export of goods and services stood at US$3.7 billion, observing a 4% increase from US$3.6 billion recorded in 2018. This growth was largely driven by the export of services reflecting strong growth in tourism receipts, which offset the fall in domestic exports. However, due to a halt in global tourism activity following the COVID-19 pandemic, export of goods and services is estimated to decline by 57% to US$1.8 billion in 2020.
Balance on goods in percent of GDP
In 2019, balance on goods in per cent of GDP stood at -43%, down from -46% in 2018. This improvement reflected higher re-exports as well as lower imports. This balance is projected to fall and remain at -39% in 2020, due to combined effects of the decline in imports as well as the slowdown in re-exports and lower GDP growth.
Import of goods in percent of GDP
In 2019, imports of goods in percent of GDP stood at 49%, lower than the 52% recorded in 2018. This stemmed from the decline in imports largely due to a slowdown in construction-related imports. As imports are expected to be lower due to the pandemic, imports of goods in percent of GDP is projected to decelerate to 45% in 2020.
Current account balance in percent of GDP
The current account balance narrowed to -27% in 2019, driven by strong travel receipts and improvement in the merchandise trade deficit, which reflected the boost in re-exports together with a decline in imports. However, current account balance is projected to widen to -30% in 2020.
At the end of July 2021, US Dollar reference rate of MMA stood at 15.42 Maldivian Rufiyaa (MVR) per US Dollar (US$).