The Maldivian economy is predominantly based on tourism and fishing. The population is scattered throughout the country, with the greatest concentration is on the capital island, Male’. Limitations on potable water and arable land constrain expansion. Development has been centered upon the tourism industry and its complementary service sectors, transport, distribution, real estate, construction and Government.

Taxes on the tourist industry have gone into infrastructure and also been used to improve technology in the agricultural sector. GDP in 1995 totaled some $238 million, or about $940 per capita. Inflation accelerated to 20% in 1993, but is now declining toward 10%. Real GDP growth averaged about 10% in the 1980s. It expanded by an exceptional 16.2% in 1990, declined to 4% in 1993, and has since bounced back to the 6% to 7% range. The merchandise trade deficit widened in 1994 to $202 million as imports increased by 45%, to $257 million and, exports increased 4.3% to $55 million. International shipping to and from the Maldives is mainly operated by the private sector, with only a small fraction of the tonnage carried on vessels operated by the national carrier, Maldives Shipping Management Ltd.

Over the years, Maldives has received economic assistance from multinational development organizations such as the United Nations and the World Bank. Individual donors--including Japan, India, Australia, and European and Arab countries--also have contributed.

Tourism. In recent years, Maldives has successfully marketed its natural assets for tourism--beautiful, unpolluted beaches on small coral islands, diving in blue waters abundant with tropical fish, and glorious sunsets.  Since the first resort was established in 1972, more than 70 islands have been developed, with a total capacity of some 10,000 beds. The hotel occupancy rate is 68%, with the average tourist staying eight or nine days and spending about $650.

Fishing. This sector employs about 20% of the labor force and contributes 12% of GDP. The use of nets is illegal, so all fishing is done by line. Production was about 104,000 metric tons in 1994, most of which was skipjack tuna. About 80% is exported.  About 28% of the catch is dried or canned, and another 5% is frozen; 54% of fresh fish is exported. The fishing fleet consists of some 1,550 small, flat-bottomed boats (dhonis). Since the dhonis have shifted from sails to outboard motors, the annual tuna catch per fisherman has more than quadrupled.

Agriculture. Poor soil and scarce arable land have historically limited agriculture to a few subsistence crops, such as coconut, banana, breadfruit, papayas, mangoes, taro, betel, chilies, sweet potatoes and onions. Agriculture provides about 8% of GDP.

Industry. The industrial sector provides only about 6% of GDP. Traditional industry consists of boat building and handicrafts, while modern industry is limited to a few tuna canneries, five garment factories, a bottling plant and a few enterprises in the capital, producing PVC pipe, soap, furniture and food products.