Economic Outlook

Mauritius is mostly a service driven economy with services contributing 72.2 % of GDP followed by industry and agriculture, which contribute 21.8% and 4% of GDP respectively. Mauritius is also dependent on trade for its economic growth with trade in goods and services contributing about 97% of GDP in 2017. In 2017, the economy grew by 4%, up from 3.9% in 2016 with services playing an important role, notably financial services, tourism and communication technology which rose by 5.85%, 5.5% and 5.3% respectively. However, investment fell to 17% of GDP in 2016, well below the 2012 high of 25%. Growth is projected to increase up to 4.2% in 2018 and 4.3% in 2019 due to an expected increase in investment and an increase in tourism among other factors. All critical sectoral growth drivers are also expected to perform well. 

The Mauritian government is in the process of implementing fiscal consolidation measures to narrow the fiscal deficit which stood at about 3.4% of GDP in 2017. The country’s current account deficit increased from 4.4% of GDP in 2016 to about 5.7% in 2017 and is expected to slightly widen in the short term due to an anticipated increase in private investment and strong import component of the Mauritian government’s public infrastructure programme. The inflation rate in Mauritius has been persistently low, as low as 1% in 2016.

The Mauritian economy is also expected to diversify further into higher value-added sectors, such as higher education services and medical tourism. Foreign direct investment (FDI) is likely to increase due to the country’s favourable business environment and recently adopted regulations such as the Business Facilitation Act which is aimed at further improving the business environment. The government’s efforts to make Mauritius a gateway for investment between Africa and Asia is also expected to contribute to the further diversification of the country’s export markets and consolidate the country’s position as a regional services hub for Africa.

Potential Opportunities

The significant risk faced by Mauritius is that of an increase in the global prices of food and energy which might negatively affect the country’s current account balance as well as contribute to inflationary pressures. Besides, the country’s narrow tax base limits the fiscal space required for infrastructure and human capital investment.

With a population of 1.27 million in 2017 that is expected to grow to 1.28 million in 2019, a GDP of US$12.3 billion in 2017, which is expected to increase to about US$13.6 billion in 2019 and a GDP per capita income of US$9,672 in 2017, projected to increase to US$10,629 in 2019, Mauritius provides a growing market for exporters and investors.

The country also offers opportunities for export diversification to SADC, SACU, COMESA, Africa, the UK and the US market under the Africa Growth Opportunity Act (AGOA). Although Mauritius’ volume of imports of goods and services is expected to decrease from 4.74% in 2017 to about 3.72 % in 2019, its amount of export of goods and services is expected to increase from -7.55% in 2016 up to 3.73% in 2019, indicating the potential for export expansion.

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