The Mauritian economy is currently performing satisfactorily despite weak global demand and subdued domestic investments. GDP at current market prices, which expanded at an average of 3.5% p.a., in real terms, over the last 3 years, is expected to grow faster at 3.9% in 2016. Government’s main objective in its strategic Vision 2030 is to steer the country into a higher plane of economic growth and inclusive development.
The main sectors contributing to growth comprise (i) financial services, (ii) accommodation and food services activities, which includes tourism, (iii) ICT activities, and (iv) wholesale and retail trade. In 2016, both the tourism and ICT sectors are expected to show real growth of about 7%, and financial services of over 5%. Since the manufacturing sector reflects slowing growth, the economy continues to diversify strongly into services, which now accounts for more than three quarters of the economy. Emerging new sectors include aviation and shipping hubs, education and healthcare services.
Total investment is projected to rebound in 2017, after several years of contraction, and needs to be raised further from its current rate of around 18% of GDP. Major infrastructure projects, including a light rail/metro express, are in the public sector pipeline. The medium term economic outlook remains favourable, supported by sustained expansion in the main sectors, as well as policies to enhance productivity by easing structural constraints, fostering innovation, and upgrading labour skills.
Macro-economic fundamentals, including public finances, are sound. Inflation is low and running at around 2% annually. Unemployment stood at about 8% in 2015, and is expected to decline in 2016. Lowering youth unemployment is an important issue. The budget deficit will be contained at 3.3% of GDP in 2016-17. This fiscal gap will be reduced in coming years to bring down public sector debt from its relatively high level of 65% of GDP in June 2016. The country’s debt profile is broadly manageable as external debt represents only a modest share of overall indebtedness.
On external payments, FDI inflows remains buoyant and are concentrated in real estate development, followed by tourism and financial services. The current account deficit has narrowed to less than 5% of GDP, while the balance of payments continues to register an annual surplus, of the order of 5% of GDP, or Rs20 bn in 2015. Gross international reserves stood close to USD 5 bn in June 2016, equivalent to over 8 months of imports.
In the region, Mauritius is bound to play a key role in bringing a flow of FDI to countries in the region such as Madagascar, Kenya, Uganda, Tanzania and francophone countries such as Rwanda and Ivory Coast.