Maldives economy contracts sharply in Q2 as tourism activity weakens, while TGST revenue reaches MVR 2.49 billion and beats projections.
The Maldives economy contracted 12.3% in the second quarter of 2026 compared with the previous quarter, while Tourism Goods and Services Tax (TGST) revenue exceeded government projections by 16.9% during the same period.
According to the latest Quarterly National Accounts from the Maldives Bureau of Statistics, real GDP stood at approximately MVR 25.1 billion in Q2 2026, down from MVR 28.7 billion in Q1. The quarterly decline was mainly linked to weaker activity in accommodation and food services.
Maldives Economy Contracts 12.3% in Q2
The Maldives economy contraction was driven largely by a sharp decline in the accommodation and food services sector, which is closely linked to tourism.
The sector’s gross value added fell 34.1% from the previous quarter and 14.3% compared with the same quarter in 2025. The decline followed a significant reduction in tourist bed-nights during the quarter.
Transportation and communication also recorded a quarterly contraction, declining 16.8% from Q1. However, several other sectors posted gains during the period.
Construction expanded 19.1% quarter-on-quarter, while financial services increased 21.7% year-on-year. Wholesale and retail trade also recorded annual growth, partly offsetting declines in tourism-related activity.
Despite the sharp quarterly contraction, real GDP was almost unchanged compared with Q2 2025, recording marginal year-on-year growth of around 0.03%.
TGST Revenue Beats Q2 Projection by 16.9%
While economic activity weakened, TGST revenue exceeded projections by 16.9% during the second quarter.
The Maldives Inland Revenue Authority (MIRA) collected approximately MVR 2.49 billion in TGST during Q2, exceeding the amount initially forecast for the period.
MIRA attributed the higher-than-expected collection mainly to an increase in the number of taxpayers filing and paying the tax.
However, beating the quarterly projection did not mean TGST collections were higher than a year earlier. TGST revenue was 8% lower year-on-year during Q2 2026.
MIRA collected approximately MVR 6.05 billion in total tax revenue during the quarter, representing a 1% increase compared with the same period last year.
Tourism Remains Central to Maldives Economic Performance
The latest figures highlight the close relationship between tourism activity and the Maldives economy. Accommodation and food services remained the largest contributor to real GDP, accounting for 18.1% during Q2 despite the sector’s decline.
At the same time, stronger performance in construction, financial services and trade provided some support to overall economic activity.
The Q2 results show contrasting developments across the Maldivian economy, with tourism-related activity facing a significant quarterly slowdown while tax collections performed above their original projections.
The Maldives Bureau of Statistics is scheduled to release the country’s Q3 2026 results on December 31, 2026.
FAQs
1. How much did the Maldives economy shrink in Q2 2026?
The Maldives economy contracted by 12.3% quarter-on-quarter in the second quarter of 2026.
2. Why did the Maldives economy contract in Q2 2026?
The contraction was largely linked to weaker activity in the accommodation and food services sector, which is closely connected to tourism.
3. What is TGST in the Maldives?
TGST stands for Tourism Goods and Services Tax, a tax collected on goods and services provided within the Maldivian tourism sector.
4. How much did TGST revenue exceed projections?
TGST revenue exceeded the Q2 2026 government projection by 16.9%.
5. How much TGST revenue was collected in Q2 2026?
The Maldives Inland Revenue Authority collected approximately MVR 2.49 billion in TGST during the second quarter of 2026.
6. Was TGST revenue higher than the previous year?
No. Although TGST collections exceeded the quarterly projection, they were 8% lower year-on-year in Q2 2026.
