The recent crises have shown the
extent to which economic and financial policies failures and poor
governance can affect global progress and put at risk hard earned
gains from globalization and trade expansion. There are now
increasing concerns over the ability of international institutions
and governments to predict potential risks and vulnerabilities
having global dimensions. Successive failures of the global
surveillance and early warning systems to predict the recent crises
have had damaging effects on world economic progress
and on the poverty eradication initiatives in many
countries.
The recent downturns continue to
provide lessons on the importance of sound economic and financial
policies and good governance. The debt crisis in the
Euro-zone and US was
the most remote event analysts around the globe would have
predicted. The crisis is already having ripple effects on BRIC
economies and is likely to further delay global recovery and put at
risk poverty eradication initiatives.
Most countries are now reviewing
their economic outlooks for fear that the euro debt crisis might
turn into a banking crisis across Europe. This could lead to a
situation like in 2008-09 where banks were unable to extend credit
- leading to a credit crunch with a slowdown in consumption,
investment and growth. The lack of fiscal room for stimulus
packages in Europe and in US to combat possible economic downturn
poses additional challenge. There is still concern over the
effectiveness of policies taken by the US and the Euro-zone to
address their debt woes. Some analysts believe that more needs to
be done to boost
confidence, improve trade, reduce debt, increase commodity
supplies and address the challenges facing the international
financial system.
Mauritian
Economy
These developments in the global
economy have wide implications for Mauritius given
its level of openness and high dependence on the regions that have
been most affected. Though Mauritius has been resilient so far, the
extended duration of the turmoil due to the Euro and US debt crisis
is already impacting on the confidence level of economic operators.
There are indications that the growth will remain below historical
average at least in the medium term and much lower than the 6% - 7%
target set out prior to the global economic crisis in
2008.
Real Sector
In 2010 the share of the
manufacturing sector in the GDP amounted to around 18.0%, wholesale
and retail trade 11.8%, real estate, renting and business
activities 12.4% and
transport, storage and communication 10.0%. All the sectors of the
economy, except sugar, recorded positive growth. The economy grew
by 4.3 per cent compared to 3.1 per cent in 2009. Growth was mainly
driven by strong performance in sectors like the ICT (13.1%),
seafood (10.4%), real estate and business activities (6.5%), hotels
and restaurants (6%) and financial services (4.3%) as well as
manufacturing (2.1%). The export oriented sectors grew by 6.5%
compared to a contraction of 0.9% in 2009.
In 2011 growth is projected at
around 4.5%. The main sectors that are likely to contribute
towards this growth are real estate, renting and business
activities (0.8%), manufacturing (0.7%), financial intermediation
(0.6%) and transport, storage and communications 0.5%).
The investment rate (as measured by
GDFCF as a share to the GDP at market price) was 24.9 per cent last
year and current indications are that it will remain around the
same level in 2011. As regards FDI, it amounted to Rs 13.9
billion (USD 450 million) last year. Latest indications are that
the FDI will drop to around Rs 7 bn this year.
Saving rate defined as the ratio of
Gross National Savings to GDP at market prices
rose to 15.6%, in 2010 and is projected to reach 16.6% this
year.
Prices
The rate of inflation, as measured
by growth in the 12 months average Consumer Price
Index, dropped to 2.9% in 2010. For the year ending July 2011, the
rate of inflation was 5.5%. Developments in the international
commodity market, mainly food and energy markets, are likely to
impact negatively on domestic prices. The upward trend is thus
likely to persist in the short term.
Fiscal Sector
As regards the fiscal sector,
Mauritius closed its 2010 financial year with a lower than
estimated budget deficit and improved debt ratios. The overall
budget deficit dropped to 3.2% of GDP in 2010 compared to 3.9% of
GDP in 2009 while public sector debt reached 57.7% of GDP by 2010
end. For 2011, the overall budget deficit is estimated at around
4.3% of GDP. The focus is, inter-alia, to keep the deficit at
sustainable level and consistent with achieving the debt target of
50% of GDP by 2018 and to improve the quality of deficit by
diverting relatively more resources towards capital investment.
The 2011 budget is likely to be
presented in November this year with main focus on
unlocking growth, expediting fiscal reforms to bring in more
fairness and efficiency in the system, improving the social welfare
system and dealing with the crisis.
External
Sector
Net exports of goods and services
showed a deficit of Rs 33,967 million in 2010, higher than the
deficit of Rs 26,454 million registered in 2009. This represented
11.3% of GDP compared to 9.4% in 2009. In 2011, the projected
deficit in net exports of goods and services is estimated at Rs
43,106 million, which represents 13.2% of GDP.
The country's net international
reserves (NIR) rose from Rs 105.7 bn in 2009 to Rs 108.0 bn in
2010, representing more than 41 weeks of imports.
Labour
In 2010 some 12,300 job were
created on a net basis. The rate of unemployment rose to
7.8% from 7.3% in 2009. The increase in the rate of unemployment
has been noted from 2009 and is mainly attributable to the effects
of the global economic crisis. Bulk of the employed remained female
workforce (13.0%). In 2011 the rate of unemployment is projected to
remain around the same level.
Per Capita GDP
The GDP per capita for the economy
reached USD 7,400 in 2010 and is projected to rise to around USD
8,950 this year. As regards per capita GNI, it is likely to reach
around 9,100 this year. Mauritius is among those countries which
belong to the upper middle income group.
Doing Business
Index
Mauritius has been among the top 30
in the Doing Business report of the World Bank since it was first
included in 2006. In, 2011 Mauritius was ranked 20th out
of 183 countries and first in Sub-Saharan Africa for Ease of Doing
Business. Mauritius also scores highly in terms of Starting a
business and Protecting investors (12th on both
sub-indices).
Risks and
Vulnerabilities
Financial soundness indicators for
Mauritius reveal high capital adequacy ratios, few non-performing
loans, and sound liquidity positions. The Mauritian banking sector
has so far withstood the downturn well. Banks have remained liquid
and well-capitalized, even above the proposed Basel III
requirements. The share of non-performing loans (NPL) decreased and
banks were profitable with 16.7 percent return on equity
despite low leverage ratios.
Stress-tests conducted by BOM in June 2010 indicated that the
domestic banks would be resilient to significant increases in NPLs
and losses on large exposures.
As regards macroeconomic
fundamentals, the public sector debt as a share of GDP is on a
downwards track. In the IMF's latest Article IV consultation Report
mentioned that "Mauritius is well placed to comply with the
legally-mandated public debt limit of below 50 percent of GDP
by 2018". The challenge is to balance the need for heavy investment
in infrastructure while at the same time reducing the public sector
debt. Priority is being given to measures that address
infrastructural constraints and improve potential growth. On the
external front, Mauritius has been able to improve its external
balances with NIR representing more than 40 weeks of imports -
which is well above the required level.
The degree of openness of the
economy, as measured by total of exports and imports of goods and
services as a ratio to the GDP, improved in 2010 and 2011.
The stimulus measures taken in the
Economic Restructuring and Competitiveness Package (2010) and in
the annual budgets have not only been effective in mitigating
impact on growth, job creation, FDI, external balances, but have
also supported restructuring initiatives to better manage risks and
vulnerabilities arising from external developments.
To overcome risks Mauritius has
also been taking a number of initiatives to deepen diversification
with the development of new sectors, specially service oriented
ones, and to support private sector initiatives to diversify their
markets. Countries with high potential growth such China, India and
Russia are the main markets where Mauritius is now trying to
increase its share of exports.
Mauritian Economy
|
Unit
|
2009
|
2010
|
2011
|
Population size
|
Million
|
1.28
|
1.28
|
1.28
|
Population Density
|
per sq km
|
625.0
|
625.0
|
625.0
|
Life expectancy
|
Male
|
yrs
|
69.5
|
69.6
|
n/a
|
Female
|
yrs
|
76.7
|
76.8
|
n/a
|
Literacy
Rate 1
|
%
|
87.9
|
n/a
|
n/a
|
Labour Force
|
000s
|
566.3
|
581.3
|
590.3
|
Male
|
000s
|
358.1
|
362.4
|
365.9
|
Female
|
000s
|
208.2
|
218.9
|
224.4
|
GDP at market price
|
USD bn
|
8.9
|
9.7
|
11.4
|
GDP per capita
|
USD
|
6,762
|
7,399
|
8,938
|
GDP based on PPP valuation of Country
GDP 2
|
USD Billion
|
17.2
|
18.1
|
19.0
|
GDP Based on PPP per capita
GDP 2
|
USD
|
13,484
|
14,097
|
14,746
|
Real Growth Rate
|
%
|
3.1
|
4.3
|
4.5
|
Contribution to GDP
|
Agriculture
|
%
|
3.9
|
3.6
|
3.5
|
Manufacturing
|
%
|
18.8
|
18.0
|
18.1
|
Construction
|
%
|
7.0
|
6.9
|
6.6
|
Transport and communication
|
%
|
9.6
|
9.6
|
9.2
|
Financial Intermediation
|
%
|
10.2
|
10.0
|
10.1
|
Real Estate & Business
|
%
|
11.9
|
12.4
|
12.9
|
Wholesale & Retail Trade
|
%
|
11.5
|
11.8
|
12.0
|
Hotels & Restaurants
|
%
|
6.7
|
7.0
|
6.9
|
Total exports (goods f.o.b &
services)
|
USD bn
|
4.3
|
5.1
|
6.1
|
Total imports (goods f.o.b &
services)
|
USD bn
|
5.2
|
6.2
|
7.6
|
Inflation
(Headline) 3
|
%
|
2.5
|
2.9
|
5.5
|
Unemployment rate
|
%
|
7.3
|
7.8
|
7.8
|
Doing Business
Rank 4
|
24
|
17
|
20
|
2nd sem.09
|
2010
|
2011
|
Budget Deficit as a ratio of
GDP 5
|
%
|
-3.9
|
-3.2
|
-4.3
|
(1) Literacy rate, adult total (% of
people ages 15 and above), Source: World Bank
|
(2) Source: IMF World Economic Outlook
April 2011 Database
|
(3) For 2011, inflation rate is for
the year ending July
|
(4) Source: Doing Business report,
World Bank
|
(5) Figures for 2011 are budget
estimates
|
Mauritius Economy:
Since independence in 1968,
Mauritius has developed from a low-income, agriculturally
based economy to a middle-income diversified economy with
growing industrial, financial, and tourist sectors. For most of the
period, annual growth has been in the order of 5% to 6%. This
remarkable achievement has been reflected in more equitable
income distribution, increased life expectancy, lowered
infant mortality, and a much-improved infrastructure. The
government's development strategy centers on expanding local
financial institutions and building a domestic information
telecommunications industry. Mauritius, with its strong
textile sector and responsible fiscal management,
has been well poised to take advantage of the Africa Growth and
Opportunity Act
(AGOA).
Mauritius: The Economic Indicators
Selected
Macroeconomic Indicators
|
|
Unit
|
2006
|
2007
|
2008
|
2009
|
2010
|
2011*
|
GDP at market prices
|
MUR Bn
|
213
|
243
|
274
|
282
|
299
|
325
|
Per capita GDP
|
USD
|
5,286
|
5,958
|
7,373
|
6,740
|
7,490
|
7,985
|
GDP growth
|
%
|
5.1
|
5.7
|
5.5
|
3.1
|
4.2
|
4.1
|
GDFCF
|
%GDP
|
19
|
5.9
|
1.3
|
8.9
|
-0.7
|
2.1
|
Inflation
|
FY, %
|
5.1
|
10.7
|
8.8
|
6.9
|
1.7
|
5.1
|
Inflation
|
CY,%
|
8.9
|
8.8
|
9.7
|
2.5
|
2.9
|
|
Budget deficit
|
FY, % GDP
|
-5.3
|
-4.3
|
-3.3
|
-3
|
-3.2
|
-4.3
|
Current Account
|
CY, MUR M
|
-19,399
|
-13,248
|
-27,633
|
-20,836
|
-24,533
|
|
Overall Balance of Payments
|
CY,Rs. M
|
-4,573
|
13,880
|
4,624
|
12,103
|
6,177
|
|
Unemployment rate
|
Average, %
|
9.1
|
8.5
|
7.2
|
7.3
|
7.8
|
7.8
|
Foreign Direct Investment (FDI)
|
MUR Bn
|
7,222
|
11,514
|
11,419
|
8,793
|
13,948
|
8,200
|
*forecast Exchange rate as at November 2011: USD
1=MUR 30 (MUR: Mauritian Rupee)
GDP Contribution per sector
Sectors
|
2010 (%)
|
2011 (%)*
|
Agriculture, hunting, forestry and fishing
|
3.7
|
3.6
|
Manufacturing
|
18.0
|
18.1
|
Electricity, gas and water supply
|
2.0
|
1.8
|
Construction
|
6.9
|
6.6
|
Wholesale & retail trade; repair of motor vehicles,
motorcycles and personal and household
goods
|
11.8
|
11.9
|
Hotels and restaurants
|
7.0
|
6.9
|
Transport, storage and communications
|
9.5
|
9.2
|
Financial intermediation
|
10.0
|
10.2
|
Real estate, renting and business activities
|
12.4
|
12.9
|
Public administration and defence; compulsory
social
security
|
6.1
|
6.0
|
Education
|
4.4
|
4.3
|
Health and social work
|
3.7
|
3.7
|
Other
community, social and personal service activities and
private
households with employed persons
|
4.5
|
4.8
|
Foreign Direct Investment (FDI)
In the year 2010, Mauritius
attracted a record level of FDI to the tune of USD 470M. Mauritius
gets its FDI mainly from France, UK, South Africa and India.
FDI to Mauritius goes to a wide array of sectors ranging from
real estate, construction, to financial services,
ICT/BPO, healthcare, knowledge, manufacturing among
others.
The Mauritius Board of
Investment (BOI), the official investment promotion agency of the
Government of Mauritius, is responsible for the promotion of
FDI in the island. The BOI is
also a one-stop shop for foreign investors interested in
developing business and investment ventures in
Mauritius.
To read more on the manifold
business and investment opportunities in Mauritius, please connect
to the website of the BOI namely www.investmauritius.com.