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Maldives GDP shrinks for the first time in 2005

Economy shrank 3.4% in 2005, the first contraction since records began in the mid-1970s as tsunami pounded the tourism industry.

india Updated: Apr 05, 2006 15:44 IST

The Maldives' economy shrank 3.4 per cent in 2005, the first contraction since records began in the mid-1970s, as Asia's tsunami pounded the lynchpin tourism industry, the island chain's foreign minister said on Wednesday.

However, Ahmed Shaheed forecast the island's gross domestic product (GDP) -- which expanded 6.0 per cent in 2004 to $650 million -- would rebound to a sharp 10-11 per cent expansion in 2006 as tourist traffic to its luxury resorts recovers.

Tourist arrivals fell to around 385,000 in 2005 from around 600,000 the previous year, Shaheed added, but started to recover sharply in late 2005.

"We had a contraction of 3.4 per cent," Shaheed said in a telephone interview from the island cluster capital of Male.

"The tourism figures speak for themselves. We were down some 40 per cent from the previous year. That accounts by and large for the contraction."

For two decades up until 2004, the Maldives posted annual average growth of around 8.0 per cent thanks to tourism.

Visitors pay hundreds of dollars a night to stay on tiny lagoon-encircled coral islands that offer some of the world's best scuba diving.

First Published: Apr 05, 2006 15:44 IST