Asia Regional Integration Center

Persistent COVID-19 variants led the economy down by 4.1% in 2021 after a steep 15.2% contraction in 2020. Visitor arrivals dropped a further 78.5% in 2021, blocking any nascent business recovery. But as borders reopened to selected markets in December 2021, visitor inflows from Australia and the United States resumed. Consumption improved from a low base, boosted by a 14.6% growth in remittances. The fiscal deficit rose to 10.8% of GDP in fiscal year 2021 (FY2021, ending 31 July 2021) as revenue dropped by 21.1%, raising the country’s debt to 79.0% of GDP. The current account deficit narrowed to 11.9% of GDP in 2021 due to record remittance inflows. Tourism receipts remain depressed but should begin to recover with less border restrictions and the resumption of visitor inflows. As business activity and hiring is restored GDP is forecast to grow by 7.1% in 2022 and 8.5% in 2023.