Construction activity in the Maldives closed 2025 on a notably stronger footing, reflecting a broad-based improvement in output, business sentiment and financial conditions across the sector. The latest Quarterly Business Survey released by the Maldives Monetary Authority shows that construction firms experienced a clear expansion in activity during the final quarter of the year, marking a meaningful turnaround after a softer performance earlier in 2025. Around half of surveyed firms reported higher levels of construction work compared to the previous quarter, while the index measuring construction activity rose sharply, indicating that the recovery is being driven by a wide range of ongoing and newly mobilised projects rather than isolated developments.
The survey findings also highlight a parallel improvement in order books, with construction companies receiving more new orders during the quarter. This strengthening pipeline suggests that demand for construction services is stabilising and gradually improving, underpinned by continued investment across housing, infrastructure and resort development segments. The steady flow of new projects is particularly encouraging for the Maldives’ resort and hospitality sector, which remains a cornerstone of the national economy and continues to generate sustained demand for construction and refurbishment works, supporting both large-scale developments and specialised contractors.
Employment conditions within the construction sector remained positive throughout the quarter, with firms continuing to add workers as activity levels increased. At the same time, wage growth and labour cost pressures eased slightly, indicating that companies are expanding capacity while attempting to maintain tighter control over operating costs. This balance reflects a sector that is rebuilding momentum in a careful and disciplined manner, aiming to grow without placing excessive strain on margins.
Despite the improving outlook, cost pressures continue to shape the operating environment. Input prices recorded further increases during the quarter, and prices charged by construction firms moved back into positive territory after earlier declines. Firms also continue to face structural challenges, including high material costs, foreign exchange constraints and delays in client payments. These factors remain key considerations in project planning and execution, influencing both timelines and investment decisions.
One of the most significant developments in the fourth quarter was the improvement in overall business and financial sentiment. Indices measuring firms’ assessment of their business situation and financial position turned positive after remaining in negative territory for two consecutive quarters. This shift points to greater stability in cash flow conditions and more balanced expectations regarding near-term performance, even as access to credit remains constrained for many non-tourism sectors.
Looking ahead to the first quarter of 2026, construction firms remain cautiously optimistic. Expectations for activity levels and new orders continue to be positive, signalling confidence that the current recovery can be sustained. However, companies anticipate a moderation in the pace of employment growth and further increases in input costs, alongside a gradual rise in capital expenditure as firms prepare for steady, longer-term expansion.
Overall, the survey results portray a construction sector that has moved out of contraction and into a phase of measured recovery. While challenges persist, the combination of rising activity, improving order flows and stronger business confidence points to a more stable and resilient outlook, reinforcing the sector’s vital role in supporting the Maldives’ broader economic growth and ongoing development ambitions.
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