DTIS, Volume I - Enhanced Integrated Framework (EIF)

CHAPTER 3
TRADE PERFORMANCE AND POLICIES
Chapter Plan
This chapter reviews the Maldives’ trade performance in recent years, import and export
trends, underlying trade policies and trade implications of the Maldives’ possible
graduation from LDC status. Throughout the discussion, capacity, policy and
institutional needs are identified.
I. Trade Performance
The Maldives economy is very open. Trade in goods typically accounts for around 75-80
per cent of GDP. If services are taken into account, trade in goods and services account
for approximately 150 per cent of GDP. This is substantially above the trade openness of
other South Asian Association for Regional Co-operation (SAARC) members. The next
most open economy within the SAARC is Sri Lanka with a ratio of 81.6 per cent as
shown in Table 3.1 below.
Table 3.1: Measures of trade openness in SAARC countries, 2002
Bangladesh Bhutan India Maldives Nepal Pakistan Sri Lanka
Trade in goods and services
31.4 n.a. 29.6 150.2 34.7 41.8 81.6
as % of GDP
Sources: IMF, Direction of Trade Statistics Yearbook, 2002; UNCTAD, Handbook of Statistics, 2003
Note: Services trade for Bangladesh, Nepal and Pakistan is based on 2001 data
Imports of goods typically outweigh exports of goods by a factor of between three and
four. However, this large shortfall in foreign exchange earnings is to a large extent made
up for by revenues from the export of services. There is therefore only a relatively modest
negative current accounts balance (see Table 3.2).
Table 3.2: Balance of Payments
2000 2001 2002 2003 2004
Domestic exports (f.o.b. US$ Mn) 76.2 76.57 90.76 112.96 122.4
Re-exports (f.o.b. US$ Mn) 32.8 34.0 41.9 39.5 58.6
Imports (f.o.b. US$ Mn) 388.59 387.28 344.7 414.3 567.3
Trade Balance (US$ Mn) -233.3 -236.0 -212.4 -262.4 -386.4
Current Account -51.5 -58.5 -35.7 -31.8 -133.9
Non-monetary capital (net) 43.5 37.3 75.5 106.1 192.7
Over all balance 7.9 21.4 39.8 74.3 58.8
External debt/GDP % 33.9 33.8 40.4 39.3 38.4
Debt service (%) 4.8 4.8 4.6 4.0 3.8
Source: 1) Economic Statistics, MMA, August 2005; 2) MMA Economic Statistics Vol. 5, No. 4, MMA,
December 2004 and update April 2005; and 3) Gross Domestic Product by Kind and Activity 1995 – 2004, MPND
17