Real GDP growth in Maldives stood at 3.7percent in 2013 and its outlook is positive at 4.5 percentfor 2014. The tourism demand is slowly picking up and has apositive impact on growth in the non- tourism sectors.Chinese tourists continue to compensate for the weakerdemand from Europe, but overall the length of stay hasdeclined, as well as spending per tourist. Growth whiledynamic was less inclusive, as the tourism industry isoperating on an enclave model of development. The share ofGDP from the primary sector, agriculture, mining andfisheries that employ the largest share of Maldivians in theouter atolls, was less than 0.3 percent of GDP in 2013.Loose fiscal policy in a context of moderating economicgrowth has led to rising macroeconomic imbalances. Whilerevenue collection has been strong, over the past five yearsthe gap between revenues and expenditures has widened,financed through unsustainable levels of public debt atincreasing interest rates. The 2014 Budget comes with arecord high envelope of MVR 17.95 billion (around 50 percentof GDP), about MVR 3 billion in new revenue measures, and anestimated 3.2 percent financing gap. Financing such highlevel of spending and meeting this ambitious financing gapwould be difficult. Cash management will be tight through2014. Inflation moderated to 6 percent in 2013 in 2013although food inflation remained high.
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