Inflation Dives to 0.6% in 1Q-2024, Says Economic Bulletin
Photo: MMA
The Maldives Monetary Authority’s Quarterly Economic Bulletin reveals a significant downturn in inflation for 1Q-2024, dropping to 0.6% from 2.3% in the previous quarter.
The MMA attributes this sharp decline in inflation to reduced prices of energy-related items and a moderation in the pace of restaurant and accommodation service costs. While elevated food inflation and certain service costs contributed positively to inflation, declines in information and communication service costs and energy-related item prices had negative impacts.
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Quarterly Economic Bulletin First Quarter 2024 is published.https://t.co/o2mP6COpac pic.twitter.com/dTIUnR1JJI— MMA (@MMA_Maldives) June 12, 2024
On the other hand, the GDP growth of 4.0% observed in Q4-2023 has continued its momentum, primarily propelled by the robust performance of the tourism sector and related industries such as transportation, communication, and wholesale and retail trade. The sectors have seen a positive performance, with a surge in tourist arrivals boosting the tourism sector. In contrast, the fisheries sector faced challenges, witnessing a contraction in activity during the same period.
Fiscal dynamics revealed a mixed picture, with total government revenue (excluding grants) witnessing an annual increase in Q4-2023, driven by growth in tax revenue despite a decline in non-tax revenue. However, total expenditure saw a significant uptick, led by a rise in recurrent expenditure offsetting the decline in capital expenditure.
Monetary indicators reflected a decline in reserve money and a deceleration in broad money growth, primarily driven by a slowdown in net domestic assets (NDA) growth despite a decrease in net foreign assets (NFA). The decline in NFA was attributed to reduced foreign asset accumulation and commercial banks’ foreign currency deposits.
In the external sector, the merchandise trade deficit widened to USD768.5 million in Q1-2024 from USD669.3 million in Q1-2023. Total merchandise exports declined due to reduced domestic exports, while re-exports increased. Merchandise imports increased, driven by the growth of most major import categories, despite a decrease in construction-related imports.
The report presents a mixed economic picture for Q1-2024, with the downturn in inflation pointing to positive consumer trends and notable growth in the GDP driven by the tourism sector. However, challenges persist in specific sectors, highlighting the need for targeted strategies to support the Maldives’ overall economic stability and growth.
