World Bank projects 5.7% Maldives GDP growth in 2025, driven by new airport terminal

The World Bank has projected that the Maldives’ real GDP will grow by 5.7% in 2025, supported in large part by the anticipated completion of the new terminal at Velana International Airport (VIA).

In its latest Maldives Development Update, the World Bank notes that medium-term economic growth is expected to strengthen slightly, with improved performance in the tourism sector playing a key role. The report attributes this optimism to increased capacity at VIA, with the new terminal expected to be operational by mid-2025.

Following the 5.7% growth forecast for 2025, GDP is projected to grow by 5.3% in 2026 and 4.7% in 2027. These projections mark a slight upward revision from the World Bank’s September 2024 estimates, reflecting better-than-expected outcomes in tourism.

The outlook, however, comes with caveats. The World Bank warns that the fiscal deficit is likely to remain high in the medium term, further increasing the public debt burden and raising debt service costs. The baseline forecast assumes only limited progress on fiscal consolidation and continued exposure to global economic uncertainties.

In 2024, the Maldivian government introduced a set of revenue-focused reforms, including changes to the Tourism Goods and Services Tax (TGST), Departure Tax (DPT), Airport Development Fee (ADF), and Green Tax. The World Bank acknowledges these measures but highlights the urgent need to implement spending-side reforms outlined in the government’s 2024 fiscal strategy. Key among these is the phasing out of universal subsidies in favour of a targeted cash transfer system aimed at improving the equity and efficiency of the country’s social protection framework.

Currently, VIA’s existing terminal has a capacity of 1.5 million passengers per year, well below the over two million tourists who visited the Maldives in 2023. The new terminal, spanning 78,000 square metres, will significantly ease congestion by accommodating over seven million passengers annually. It will also feature modern amenities aimed at enhancing the travel experience.

The government aims to bring the new terminal into operation by October 2025, marking a major milestone in the Maldives’ tourism and transport infrastructure development.