Maldives: Quarterly Economic Bulletin - March 2017

Transcription

1. Quarterly Economic Bulletin March 2017 Volume 23 Issue 1
2. This bulletin is compiled by the Monetary Policy and Research Division (MPRD) of the Maldives Monetary Authority (MMA). It covers developments in the domestic and international economy during the first quarter of 2017. The analyses are based on information provided by relevant government authorities, commercial banks operating in the country, public enterprises and other private sector sources, as at 6 June 2017. Where actual data is not readily available, estimates have been made by MPRD based on available information. The timely receipt of data is therefore crucial to the compilation of this publication and the analyses contained herein.
3. Contents Recent Economic Decelopments International Economic Developments 1 Output1 Inflation 2 Commodity Prices3 Domestic Economic Developments5 Real Economy5 Public Finance9 Money and Banking10 External Trade13 Statistical Appendix
4. Abbreviations bpsbasis points c .i.f. cost, insurance, freight CPI consumer price index f.o.b. free on board GDP gross domestic product GIR gross international reserves IMF International Monetary Fund M0 reserve money M2 broad money MACL Maldives Airports Company Ltd MMA Maldives Monetary Authority MRR minimum reserve requirement NCG net claims on central government NDA net domestic assets NFA net foreign assets NPL non-performing loan ODF overnight deposit facility OPEC Organisation of the Petroleum Exporting Countries UAEUnited Arab Emirates UK United Kingdom US United States
5. Recent Economic Developments
7. International Economic Developments is well below the threshold level of the Federal Reserve . In the euro area, growth remained solid on the back of its continued cyclical recovery and recorded an annualised growth rate of 1.7% after registering Output 1.8% in Q4-2016. Growth was largely driven According to the World Economic Outlook by strengthening domestic demand and lower published by the International Monetary Fund unemployment levels in the region. Looking at (IMF) in April 2017, global growth for 2017 is the main economies in the region, growth in the estimated at 3.5%, an upward revision from 3.4% region was largely boosted by growth in Germany estimated in January 2017. The upward revision to and Spain—with annualised growth rates of 1.7% global growth projection largely resulted from the and 3.0%, respectively. Germany picked up pace continued recovery in international trade coupled during the quarter, supported by buoyant domestic with improved financial conditions. Growth of consumption and strong construction sector, while the advanced economies improved on the back Spain continued to grow against the background of continued cyclical recovery while economic of improved labour market conditions. However, performance growth in France was hindered by political across emerging markets and developing economies remained mixed. instability and posted a slow growth of 0.8% in Q12017. Looking at the advanced economies, activity in the United States (US) economy recorded a growth The Japanese economy grew remarkably in Q1- rate of 1.2% in Q1-2017, a drop from 2.1% in the 2017 and stood at 2.2%, up from 1.4% recorded in preceding quarter. The significant deceleration in the preceding quarter. Growth was almost entirely growth reflects lower private inventory investments driven by a recovery in consumption, particularly coupled with softer consumer demand—the main household consumption which rose by 1.4% in driver of the economy. The sluggish consumer annual terms. Further, growth in net exports also demand in the US came from a downturn in impacted positively to the growth. personal consumption expenditure, amid an exceptionally warm weather which had reduced energy consumption. In contrast, the US fiscal easing remains in place and consumer confidence continued to be robust while unemployment rate Meanwhile, in the United Kingdom (UK), annual growth had decelerated to 2.0% during the quarter, after following a robust growth during the past two quarters. The slowdown was concentrated in the consumer-facing sectors, largely reflecting the Quarterly Economic Bulletin - March 2017 1
8. impact of the pound sterling ’s past depreciation on household income and spending. Inflation Global inflation has been increasing and reached 3% Looking at emerging market and developing during Q1-2017, primarily reflecting the rebound economies, the Chinese economy performed in commodity prices, particularly energy prices. better-than-expected and expanded by 6.9% in While the uptrend has been stronger for advanced Q1-2017. This reflected the resilient domestic economies, inflation started to pick up more consumption and robust growth in the services recently in the emerging markets and developing sector as the economy continues its rebalancing economies due to the downward pressure from the transition. Furthermore, the government continued earlier exchange rate depreciations. Inflation in this the policy support which has led to credit growth group is, however, expected to gain strength as the and investment in infrastructure projects such as effect of exchange rate fades away. real estate development. Delving into price developments in advanced The Russian economy continued its recovery economies, consumer price inflation in the US in Q1-2017 mirroring the firming of global oil accelerated to 2.5% when compared with the prices. Further, financial conditions improved preceding quarter, mostly stemmed from higher in the economy, which had led to improved energy prices at the start of the quarter. Energy confidence in both investment and consumption prices went up in January due to increased gasoline during the quarter. While the real wage growth prices, however, it declined towards the end of the and improvements in labour market conditions quarter. The growth in prices also reflected higher contributed to the upturn in domestic consumption, prices for food, rent, and airline fares during the better performance of Russian ruble in the global period. market had aided to the uptick in investments in the economy. In the euro area, the rate of inflation as measured by the Harmonized Index of Consumer Prices pushed The Purchasing Managers Index for India pointed up to 1.8% during the quarter. Looking at the to improved economic conditions during Q1- individual components, prices of energy, transport, 2017 as indicated by increased new orders in both and vegetables recorded a marked growth during manufacturing and service sectors which resulted the quarter. However, the price growth was lower from higher demand. The economy has also been than expected in the transport sector, mainly due to showing a rebound after the negative impact of the timing of Easter holiday which fell in April this demonetisation which resulted in temporary cash year instead of March last year. shortages and payment disruptions in the economy. 2 Quarterly Economic Bulletin - March 2017
9. The annual rate of inflation in the UK rose above quarter . In contrary, inflation in Russia decelerated the Bank of England’s target rate and stood at significantly in annual terms and stood at 4.6%, 2.2% in Q1-2017. Rising food prices and energy partly due to the appreciation of ruble during the prices coupled with the recent depreciation in the quarter. In addition, the increased supply resulted pound sterling put upward pressure on inflation. from a bumper harvest had pushed down prices of However, this was partly offset by the lower fruits and vegetables during the period. transport cost, particularly a decline in air fares as a result of the Easter holiday timing. Commodity Prices In Japan, the annual rate of inflation picked up to The IMF commodity price index showed an average 0.3% during Q1-2017 after a prolonged period of increase of 35% and 6% in annual and quarterly subdued inflation. This was mainly due to higher terms, respectively, during the quarter. This largely energy prices combined with the recent weakening reflected a substantial increase in prices of major in the yen which lifted prices during the quarter. commodity groups including crude oil, metal, and In addition, higher food prices contributed food prices. significantly to price growth. The surge in crude oil prices in the latter part of Looking at the emerging markets and developing 2016, following the agreement by the Organisation economies, the annual rate of inflation in of the Petroleum Exporting Countries (OPEC) and China stood at 1.4% during the quarter, a slight some non-OPEC producers to cut production, deceleration from the previous quarter, reflecting a continued into 2017. Prices of crude oil increased decline in food prices during the quarter. Further, to an average of US$53.0 per barrel compared with inflation rate in March 2017 remained lower than US$49.1 per barrel in the previous quarter, which expected due to declines in food and tourism prices is an annual increase of 62%. However, oil prices in the wake of spring festival. However, prices of showed a declining trend towards the end of the non-food items, including coal products and non- quarter mainly due to increased concerns over metallic building materials rose during the quarter. commitments to the OPEC and non-OPEC cuts. In India, overall inflation increased to 3.5%, in annual terms, during the quarter although it hit a record low level in January due to the recent demonetization shock together with the decline in prices of vegetables and pulses. Prices of food and fuel picked up markedly during the latter part of the In addition, an increase in supply due to robust recovery in the US shale oil activity combined with larger-than-expected US oil inventories contributed to the decline. Furthermore, the natural gas price index increased at the turn of the year on the expectation of strong winter demand. Nonetheless, prices of natural gas remained subdued towards the Quarterly Economic Bulletin - March 2017 3
10. end of the quarter due to lower demand resulted from a mild winter this year . Metal prices also rallied during the quarter and increased by 35% and 11% in annual and quarterly terms, respectively, driven by strong demand and supply constraints. On the demand side, the surge in metal prices largely stemmed from higher metal consumption in China. Real estate investment in China has been expanding significantly, supported by the continued fiscal support to the construction sector by the Chinese government. Further, the projected infrastructure spending by the US government also provided boost to metal prices. On the supply side, labor strikes in some metal producing countries as well as declining investment in, and closure of high-polluting mining operations have also pushed up prices of metal during the quarter. As for the developments in food prices, global food prices measured by the IMF food price index, increased by 10% in annual terms during the quarter. Major categories of agriculture including cereal, wheat, maize, sugar and meat witnessed increase in prices during the period. The shortfalls of maize and wheat output in the US, coupled with higher international demand were reflected in the price growth. According to the Food and Agricultural Organization of the United Nation, prices of cereals increased significantly during the first two months of 2017 although it firmed up towards the end of the quarter. 4 Quarterly Economic Bulletin - March 2017
11. Domestic Economic Developments Real Economy Tourism The performance of the tourism sector showed mixed developments during the first quarter of the year despite it coinciding with the peak season of the industry . On the positive front, tourist arrivals grew by 4% in annual terms, the same rate registered in Q1-2016, and totalled 395,053 during the quarter Figure 1: Quarterly Inbound Tourist Arrivals, 2014–2017 (Figure 1). Tourist arrivals also increased by 5% (thousands, percentage change) in quarterly terms, reflecting the usual seasonal 400 16% 350 14% pattern. The annual growth in arrivals was largely 300 12% due to the significant increase in arrivals from 200 Europe which offset the slight decline in arrivals from the Asia and the Pacific region. Higher arrivals from Italy and Russia during the quarter largely contributed to the growth in arrivals from Europe. 10% 250 8% 6% 150 4% 100 2% 50 0% 0 -2% 2014 2015 Arrivals (left axis) 2016 2017 Annual growth (right axis) Source: Ministry of Tourism On the other hand, the decline in arrivals from the Asia and the Pacific was mainly due to the sizable decline in arrivals from the single largest market― China―which offset the considerable growth in arrivals from India and South East Asian countries during the quarter. As for other indicators of the tourism industry, bednights registered a growth of 8% in annual terms during Q1-2017, lower than the growth rates recorded during the past two quarters as well as Quarterly Economic Bulletin - March 2017 5
12. the corresponding quarter of last year (Figure 2). However, the average duration of stay increased to 6.5 days in Q1-2017, up from 6.3 days in Q1-2016. On the supply side, the registered number of resorts increased to 128 resorts at the end of Q1-2017 in comparison to 116 resorts at the end of Q1-2016. With the opening of new resorts, the operational bed capacity of the industry grew by 13% in annual terms during the review quarter. Partly reflecting this, the occupancy rate of resorts declined to 81% in Q1-2017, a decline of 3 percentage points in annual terms. Figure 2: Quarterly Bednight Growth and Average Stay, 2014–2017 (percentage change, days) 20% 6.6 6.4 15% 6.2 10% Looking at arrivals by source markets, Europe 5% remained as the leading market during the quarter 0% with a market share of 54% of total arrivals, up from 52% in the corresponding quarter of 2016. The top markets from Europe were; Italy (accounting for 17% of arrivals from the region), followed by UK (15%), Germany (14%), Russia (9%) and France (9%). Arrivals from Italy, Russia and France increased while arrivals from the UK and Germany decreased in annual terms. Meanwhile, arrivals from the Asia and Pacific region had a market share of 38% in Q1-2017, down from 40% in Q1-2016. Similar to previous years, China remained as the main market from the region (54%) and accounted for 20% of total tourist arrivals during the quarter. Other main markets from the region included India and Japan. 6 Quarterly Economic Bulletin - March 2017 6.0 5.8 5.6 5.4 -5% 5.2 5.0 -10% 2014 2015 Bednight growth (left axis) Source: Ministry of Tourism 2016 2017 Average stay (right axis)
13. real estate commercial building and guesthouses Fisheries Activity in the fisheries sector remained strong during Q1-2017 when compared with the corresponding quarter of 2016 . Fish purchases made by local fish processing companies increased by 16% in annual terms and summed 13.5 thousand metric increased significantly in annual terms during the quarter. Construction-related imports grew by 19% in annual terms during the quarter, mainly attributed by the ongoing infrastructure projects. tonnes during the quarter- the fourth consecutive Wholesale and Retail Trade quarter of positive growth. This was driven by a Activity in the wholesale and retail trade sector significant increase in skipjack tuna purchases were also robust during Q1-2017 as indicated as well as a considerable increase in yellowfin by bank credit to the sector and private sector tuna purchases during the quarter. On the export imports― key indicators of the sector. Bank credit front, developments in fish exports also remained to the wholesale and retail trade sector increased buoyant during the period, registering increases in by 12% during the quarter when compared with both earnings and volume of fish exports. Earnings the corresponding period of 2016. As for private from fish exports increased by 51% in annual sector imports, it increased by 34% in annual terms terms, mainly due to higher earnings from frozen during the quarter. skipjack tuna and frozen yellowfin tuna. Similarly, the volume of fish exports also increased due to a rise in such export volumes. Inflation The rate of inflation (as measured by the annual change in consumer price index (CPI) at the Construction national level) accelerated significantly to 3.4% In line with the current boom in the construction during Q1-2017 from 1.8% in the previous quarter. sector, the sector continued to perform robustly This was largely driven by an increase in global in Q1-2017 as indicated by both bank credit to commodity prices, coupled with domestic food the sector and construction-related imports― prices, housing rentals, cigarette prices and prices key indicators to measure the performance of the of energy-related items (Figure 3). sector. Commercial bank credit to the construction sector grew by 31% in annual terms during the quarter, largely on the back of increases in loans for residential housing, new resort development and renovation of resorts. In addition, credit for Food prices, which accounted for 26% of the CPI basket, rose by 7.6% in Q1-2017. The hike in such prices mainly stemmed from a surge in prices of staple food items—rice, flour and sugar—due to the cut down in government subsidy on these essential Quarterly Economic Bulletin - March 2017 7
14. food items in October 20161 . Furthermore, pick up in volatile fish prices (which make up 33% of the food category) also contributed to the higher rate of inflation, registering 1.3% in Q1-2017 following three consecutive quarters of negative price growth. The increase in fish prices was mainly due to an increase in prices of fresh, chilled or frozen fish. An increase in rental prices of housing (which accounts for 12% of the CPI basket) also contributed Figure 3: Contribution of Sub-Categories to CPI Inflation, 2014-2017 significantly to the increase in inflation during (annual percentage change, percentage point contribution) cigarette prices also pushed up the total inflation 2 1.0 1 Energy related items Food excluding fish Health rate during the review quarter. This was due to an upward revision of import duties on cigarettes which came into effect in March 2017. Looking at the developments in other components of the CPI, prices in the furnishing, and household equipment category rose by 3.6% in Q1-2017. This was due to a growth in prices of major household appliances. Price growth in this category was also driven up by an increase in prices charged for domestic services. Similarly, prices in the transport category also rose during the quarter as a result of an increase in ferry fares. Further, an increase in fees charged for secondary education, 1  Once the base effect of the policy change wears off from October 2017, year-on-year inflation should return to pre-policy change levels, holding all else constant. 8 Quarterly Economic Bulletin - March 2017 Source: National Bureau of Statistics Transport Fish Education Rent Other CPI (left axis) Feb-17 Oct-16 Dec-16 Jun-16 Aug-16 Apr-16 Feb-16 Oct-15 -2 Dec-15 -1 -2.0 Jun-15 0 Aug-15 0.0 -1.0 Apr-15 in such prices during 2016. Further, an increase in 3 2.0 Feb-15 to decline as a result of the base effect of a reduction 3.0 Oct-14 of Q4-2016. However, cooking gas prices continued 4 Dec-14 upward revision of fuel surcharges in the latter part 5 4.0 Jun-14 upwards during the review quarter following the 5.0 Aug-14 Q1-2017. Furthermore, electricity prices edged
15. prices charged at caf és and price of information processing equipment also placed upward pressure on inflation in Q1-2017. However, a decline in prices charged for mobile phones slightly negated Figure 4: Composition of Domestic Claims on Government, 2016-2017 the impact on overall inflation during the quarter. 13% 31% Public Finance 2 Loans and advances Treasury bills Q1-2016 Treasury bonds With regard to the latest data on domestic 56% financing, the total stock of domestic claims – 3 12% which includes treasury bills, treasury bonds and loans and advances to the government – increased marginally to MVR26.5 billion at the end of March 36% Loans and advances Q1-2017 Treasury bills Treasury bonds 2017 from MVR26.4 billion at the end of December 52% 2016. This reflected a net borrowing of MVR9.2 million when compared with a net borrowing of MVR611.4 million at the end of March 2016. Source: Maldives Monetary Authority Looking at the sources of domestic financing, government securities remained the primary source of domestic borrowing and the outstanding stock of government securities reached MVR23.2 billion Figure 5: Treasury Bills by Holder, 2013-2017 (millions of rufiyaa) at the end of March 2017. The outstanding stock of government securities, however, grew marginally during the quarter due to a net repayment of treasury bills, which offset the net issuance of treasury bonds. Treasury bonds recorded a net issuance of MVR654.7 million, and reached MVR9.4 billion at the end of Q1-2017. Meanwhile, total loans and advances to the government stood at MVR3.2 billion at the end of Q1-2017, which was only a slight increase from a year ago. 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2013 2014 Private parties PNFCs 2015 OFCs 2016 MMA 2017 Commercial banks Source: Maldives Monetary Authority 2  The total revenue and expenditure data for Q1-2017 was not available at the time of compilation of report. 3  Excluding publicly guaranteed debt and external financing. Quarterly Economic Bulletin - March 2017 9
16. As for the composition of government securities , although treasury bills remained the largest portion of the outstanding government securities (Figure 4) it recorded a net repayment of MVR653.2 million at the end of Q1-2017 (Figure 5). The outstanding stock of treasury bills amounted to MVR13.8 billion at the end of the quarter. Conversely, the marginal growth in the outstanding government securities stemmed from the net issuance of treasury bonds. This reflected the conversion of part of the treasury bills held by the pension fund to treasury bonds. Money and Banking As for the developments in monetary aggregates, reserve money (M0) continued to decline in annual terms, with the pace of decline accelerating from Figure 6: Changes in Reserve Money and Broad Money, 2013-2016 (annual percentage change) 50 13% at the end of Q4-2016 to 16% at the end of Q1- 40 2017 (Figure 6). Reserve money stood at MVR9.3 20 billion at the end of March 2017. The annual contraction in M0 was entirely due to the decline in the net foreign assets (NFA) of the MMA. However, the decline in the NFA of the MMA was partially offset by the growth in the net domestic assets (NDA) of the MMA during the review quarter. The NFA of the MMA recorded an annual decline of 41%, largely due to a switch of a foreign asset of the MMA to a domestic asset. This reflected MMA’s investment in a foreign currency bond issued by the Maldives Airports Company Ltd. (MACL) in November 2016. The marked growth in foreign liabilities of the MMA also contributed to the decline in the NFA, which resulted from the foreign 10 Quarterly Economic Bulletin - March 2017 30 10 0 (10) (20) (30) 2013 2014 2015 Growth in M0 Source: Maldives Monetary Authority 2016 Growth in M2 2017
17. currency swap agreement between the MMA and commercial banks ’ investments in foreign currency the Reserve Bank of India. Conversely, the NDA demand deposits overseas. The decline in the NFA of the MMA recorded a significant growth at the was also due to the increase in foreign currency end of Q1-2017, partially offsetting the fall in NFA. borrowings from head offices of commercial banks. While the MMA’s investment in the MACL Bond However, the decline in the NFA of the banking was the driver of NDA growth, an annual decline system was offset to some extent by a 22% annual in overnight deposit facility (ODF) placements increase in the NDA. This was largely contributed also contributed to the significantly higher NDA by the growth in the NDA of the MMA. The growth during the quarter. growth of commercial banks’ net claims on central government and claims on the private sector also With regard to the total liquidity absorbed by the MMA’s monetary operations via the MMA’s ODF, contributed to the NDA growth of the banking system during Q1-2017. an annual decline was recorded during Q1-2017. Commercial banks’ placements of funds in the As for the various components of NDA, net claims ODF averaged MVR3.5 billion during the quarter, on central government (NCG) of the banking depicting a fall of MVR136.7 million compared system rose by 11% in annual terms and stood at with Q1-2016. MVR13.0 billion at the end of March 2017. This was a deceleration when compared with a growth of Broad money (M2) recorded a 5% annual decline at the end of Q1-2017, and amounted to MVR30.9 billion compared to a slight increase at the end of Q4-2016. On the components side, the annual 18% at the end of December 2016. The deceleration of NCG growth reflected the slowdown in growth of commercial banks’ investment in government securities. decline in M2 was contributed by the fall in both quasi money and narrow money. The main With regard to credit to the private sector by contributor to the sharp decline in quasi money commercial banks (aggregate for both local was the fall in foreign currency demand deposits currency and foreign currency loans), an annual while the decline in narrow money was mainly due growth of 12% was registered for Q1-2017, a slight to a decline in local currency demand deposits. acceleration compared with the previous quarter. While local currency denominated loans registered Delving into the counterparts of M2, the annual decline in broad money was primarily contributed by the decline in the NFA of the MMA. The decline in the NFA of commercial banks also contributed to the fall in M2. This mainly reflected the decline in an annual growth of 25%, foreign currency loans grew by 2% during the review quarter. The growth in private sector credit was mainly due to credit extended to construction sector, which remained high with a growth of 36% (MVR952.2 Quarterly Economic Bulletin - March 2017 11
18. million ) during the quarter. The increase in credit 2% (or MVR0.7 billion). Deposit base grew by 13% to construction sector primarily reflected the when compared with the corresponding quarter of residential housing boom. Meanwhile, the growth last year. in private sector credit was also contributed by credit extended to the tourism sector (accounted The composition of assets remained relatively for the largest portion, 39% of total private sector unchanged compared with the end of Q4-2017. Net credit), particularly for new resort development loans accounted for the majority (42% of net assets) and renovation of resorts. and registered an increase of 3% to reach MVR18.8 billion at the end of the quarter. Investments in Looking at other sectors of the economy, credit T-bills represented 22% of gross asset, showing a extended to real estate development grew by significant growth of 19% in annual terms. 22% during Q1-2017, with an annual increase of MVR150.5 million, largely fuelled by the growth As regards asset quality, the absolute value of in commercial building. As for credit extended to non-performing loans (NPLs) decreased by 2% wholesale and retail trade; and transport, increases (MVR0.4 billion) in annual terms; however it of MVR341.2 million and MVR220.3 million were increased slightly by 4% when compared with registered at the end of Q1-2017, respectively. the previous quarter. The NPL ratio remained the same as the previous quarter at 11%, down slightly As for interest rates on loans and advances to the from 12% a year ago. Adequate provisioning has private sector, rates on local currency loans declined been done by the banks, fully covering the NPL by 1 bps at the end of March 2017 when compared portfolio. Lending continues to be concentrated with December 2016, while it declined by 32 bps in the tourism sector, making up 35% of the total when compared with March 2016. Rates on foreign loans, followed by commerce and construction, currency loans recorded a decline of 4 bps when each at 17%. compared with December 2016, while it increased by 10 bps when compared to the corresponding The capital adequacy of the banking sector quarter a year ago. remained strong, with the total risk-based capital ratio at 41%, due to the large share of low risk Banking Sector Performance The overall performance of the banking sector remained strong during Q1-2017 as depicted by the assets in the banks’ portfolio. Total liquidity also remained high, with liquid assets at 67% of total deposits and borrowed funds. key indicators. The aggregate net assets registered The pre-tax profits earned by the banks amounted a growth of 2% (MVR1.0 billion) on a quarterly to MVR0.6 billion, which has decreased by 26% basis, mainly due to a growth in the deposit base by compared with the same period of the previous 12 Quarterly Economic Bulletin - March 2017
19. year . However, this difference is on account of extraordinary profits reported in the previous year due to large loan recoveries during the first quarter of 2016. The profitability ratios were high, as indicated by an annualized return on average Figure 7: Composition of Fish Exports Earnings, Q1-2017 equity of 15%. External Trade Merchandise exports—comprising 10% 3% 3% Skipjack 2% domestic 38% Yellowfin tuna Bigeye tuna exports and re-exports—increased by US$29.4 Canned or pouched Processed fish, nes million annually and totalled US$85.6 million in 44% Other Q1-2017. The major contributor to the increase in exports was the significant rise in domestic exports, although re-exports also increased during the Source: Maldives Customs Service quarter. Total domestic exports rose by US$18.0 million while re-exports registered an annual growth of US$11.4 million during the quarter. The increase in re-exports was largely due to a growth in the re-export of oil, especially jet-fuel sold to aircrafts at international airports. Meanwhile, the increase in domestic exports was entirely due to a growth in fish exports (Figure 7). Fish exports grew by 51% (US$17.6 million) Figure 8: Annual Changes in the Value of Fish Exports, Q1-2017 (thousands of US dollars) 14000 12000 10000 8000 6000 in annual terms, largely driven by a significant 4000 increase in both frozen skipjack tuna and frozen 2000 yellowfin tuna exports (Figure 8). This can be attributed to an increase in the volume of such exports in the review period. However, the growth 0 2000 Skipjack Yellowfin tuna Bigeye tuna Other tuna Canned or Processed Fish (excluding pouched fish, nes tuna) Source: Maldives Customs Service in fish export earnings was slightly hampered by the decline in earnings from fresh or chilled yellowfin tuna exports as result of lower export volume. Quarterly Economic Bulletin - March 2017 13
20. The expenditure on imports increased by 18 % (US$86.9 million) in annual terms and totalled US$569.9 million in Q1-2017. This was mainly contributed by an increase in the import value of petroleum products, which reflected the surge in global oil prices during the period. Furthermore, with the expansion of the construction sector activity, import expenditure on construction sector-related imports (wood, metal, cement and aggregates and other construction-related items) and machinery and mechanical appliances posted a significant growth during the quarter (Figure 9). Figure 9: Composition of Imports, 2016-2017 (millions of US dollars) 120.00 100.00 80.00 60.00 40.00 20.00 0.00 Direction of Trade The Asian market remained the main destination of Maldivian exports, representing 65% of domestic exports, followed by Europe with a share of 29%. The value of exports to Asia rose significantly in annual terms during Q1-2017, almost entirely due to an increase in exports to Thailand—the single largest Asian market for Maldivian exports. Such export items mainly included frozen skipjack tuna and frozen yellowfin tuna. Meanwhile, exports to Europe rose only marginally in Q1-2017. The value of exports to some major European export destinations declined in the review period, which included Germany, France, Italy, Netherlands and Switzerland. The main export item to these countries is fresh or chilled yellowfin tuna. However, the value of exports to the UK and Ireland increased, offsetting the declines recorded for the aforementioned European countries. These countries were the main markets for canned or pouched tuna. 14 Quarterly Economic Bulletin - March 2017 Food Items Petroleum Products Wood, Metal, Machinery and Furniture, Cement And Mechanical Fixtures and Fittings Aggregates Appliances and Parts Q1-2016 Source: Maldives Customs Service Q1-2017 Transport Equipments and Parts