Debt Sustainability - Economics does not dictate a specific debt-to-GDP ratio limit for countries [1] - High public debt is inherently fragile [1]

Fiscal Policy - Thailand plans to reduce government borrowing by approximately 8% starting in October [1] - The reduction aims to maintain fiscal discipline as public debt nears the legal limit [1]

Investment Rating - The report does not explicitly provide an investment rating for the Maldives industry Core Insights - Economic growth in the Maldives remained robust in 2024, with real GDP growth estimated at 5.5 percent, driven primarily by a strong tourism sector [18][34] - Tourist arrivals reached an all-time high of 2.05 million in 2024, marking an increase of 8.9 percent compared to 2023 [18][35] - Headline inflation surged in late 2024, with food inflation averaging 6.6 percent, up from 5.9 percent in 2023 [19][42] - The fiscal deficit widened to MVR 12.7 billion (US$822.4 million or 11.7 percent of GDP) in 2024, driven by rising expenditures [20][52] - The current account deficit (CAD) remained elevated at US$1.4 billion (20.5 percent of GDP) in 2024, with a widening trade deficit [21][68] - Foreign exchange reserves fell to critically low levels, reaching US$371.2 million in September 2024, before recovering to US$832.1 million by February 2025 [22][69] - Public and publicly guaranteed debt rose to US$9.4 billion (134.2 percent of GDP) in 2024, with external debt servicing costs increasing significantly [25][60] Economic Update - Growth remained robust, supported by tourism, with a 7.1 percent increase in the tourism sector in the first three quarters of 2024 [34] - The fiscal deficit continued to increase, with total expenditure rising to 41.3 percent of GDP [20] - The current account deficit remained elevated, financed by foreign direct investment [21][68] Outlook and Risks - Growth is projected to moderate slightly, with real GDP growth expected at 5.7 percent in 2025 [26] - Inflation is anticipated to rise, potentially increasing poverty rates if targeted cash transfers are not implemented [27] - The fiscal deficit is likely to remain elevated, with public debt projected to rise further [28] - Risks to the outlook are significantly on the downside due to global trade uncertainties and high external debt service payments [29]