| Recent macroeconomic and financial developments: |
| Real GDP growth remained robust at 7% in 2023, though down from 8.9% in 2022. Growth was driven by services (construction and tourism) on the supply side and by consumption and investment on the demand side. Since the beginning of 2023, the authorities have paused monetary policy tightening as inflationary pressures eased. Average headline inflation declined from 10.8% in 2022 to 7.0% in 2023 as international commodity prices fell. |
| The fiscal deficit narrowed from 6.1% of GDP in 2021/22 to 5.3% in 2022/23 as fiscal consolidation measures focused on boosting revenues and containing expenditure. Gross public debt decreased from 86.1% of GDP in 2022 to 79% in 2023 due to sustained economic recovery and measures to improve debt sustainability. The current account deficit narrowed from 11.7% of GDP in 2022 to 5.1% in 2023, driven by tourism earnings and a larger surplus in the primary income account. The current account deficit was financed by the financial account. Gross international reserves stood at $6.7 billion at the end of October 2023, offering 10 months of import cover, a decline from 13.5 months at the end of October 2022. Nonperforming loans stood at 5.8% of gross loans in September 2023, up from 5.2% in September 2022, while the ratio of regulatory capital to risk-weighted assets was 21.3% in September 2023. |
| The poverty rate (at the international poverty level of $6.85 a day for upper-middle-income countries) was estimated at 13% in 2023, down from 17% in 2020. Unemployment was an estimated 6.1% at the end of 2023, while youth unemployment was 17.3%. |
| Outlook and risks: |
| Growth is projected to slow to 4.9% in 2024 and 3.7% in 2025 on expected weaker external demand for exports. Inflation should decline to 5.8% in 2024 and 5% in 2025 due to a projected easing of global commodity prices. The fiscal deficit is expected to narrow further to 4.5% of GDP in 2024 and 4.3% in 2025, attributable to higher tax revenues supported by robust economic growth and expenditure rationalization. The current account deficit is projected to narrow further to 4.2% of GDP in 2024 and 4.5% in 2025, driven largely by solid performance in the tourism sector. Risks to the growth outlook remain, however, and include uncertainties due to the persistence of the economic effects of Russia’s invasion of Ukraine, an elevated debt burden, geopolitical fragmentation, and the impact of climate change. Moreover, the rapidly ageing population could put greater fiscal pressure on the universal welfare system, making long-term growth more vulnerable. Risk mitigation measures could include strengthening tax enforcement and compliance, prioritizing domestic debt to reduce foreign exchange risks, stepping up reforms to gain greater access to global climate funds, and more tightly targeting welfare programs. |
| Reform of the global financial architecture: |
| Agriculture’s (including forestry and fishing) share of GDP declined from 6.1% in 2001 to 3.5% in 2022, while its share of total employment shrank from 11.7% to 5%. Over the same period, the industry’s shares also declined, from 26.7% of GDP to 18% and from 36.5% of employment to 21.5%, while services’ shares increased from 56% of GDP to 66% and from 51.6% of employment to 73.4%. The declining shares of agriculture and the rising shares of services highlight the remarkable progress Mauritius has made in structural transformation. To consolidate these gains, the country should foster economic diversification and address climate change vulnerabilities so that it can move up the value chain and become a high-income country. |
| To finance its development priorities and address structural vulnerabilities, Mauritius needs to enhance its domestic resource mobilization and tackle its debt vulnerability risks, including limiting its exposure to foreign exchange risks and adjusting the maturity structure and interest mix of its public debt. As a small island developing country, Mauritius is extremely vulnerable to climate change, and adapting to climate change is particularly critical. However, according to the International Monetary Fund, current donor funding to the country is directed mainly to mitigation efforts. To fully finance both adaptation and mitigation, Mauritius needs to focus on mobilizing more resources through grants, concessional loans, global climate funds, and climate financing debt instruments (such as green bonds) and on rechanneling unused Special Drawing Rights, a key proposal of the Bridgetown Initiative. In the long term, the country needs to deepen its capital market to attract more foreign direct investment, expand trade, and foster integration into regional and global value chains. |
| For the full document click the link below:
Mauritius: Economic Outlook |
