The World Bank has released a report stating that the expected productivity growth rate has declined compared to the previous estimation owing to the preference of tourists on cheaper guesthouses over high-end resorts.

The World Bank has lowered its productivity growth forecast for The Maldives this year due to the demand in tourism shifting from resorts to guesthouses in The Maldives.

The most recent South Asia Development Update report released by the World Bank had estimated a productivity growth of 4.7 per cent in The Maldives this year. However, this estimation reflects a 0.5 per cent decrease from the previous forecast, the report said.

While the report indicated that productivity growth is expected to decline more than the estimated percentage due to changes in the tourism industry, the World Bank revealed that this estimated decline is attributed to tourists opting for cheaper guesthouses for their vacations rather than high-end resorts.

However, the report stated that the productivity growth will increase by 5.2 per cent in 2025 if the development of Velana International Airport is concluded within the year.

While tourist arrival rate is expected to increase after the completion of the project, World Bank forecasts that the current account deficit will reach 20 per cent of GDP and the fiscal deficit will reach double digits in 2025.

In addition, while the state’s debt to GDP ratio is expected to increase, the World Bank reiterated concerns about sustainable repayment of debts.