Country Report Mauritius April 2009

Outlook for 2009-10

• The Alliance sociale (AS) coalition government will continue its policy of liberal economic reform, although its policies may become more populist in the run-up to the next general election, due in mid-2010.
• The fiscal deficit is forecast to widen to 4.8% of GDP in fiscal year 2008/09 (July-June), as revenue will be hit by slowing GDP growth and expenditure will be swollen by the government's measures to stimulate the economy.
• The Economist Intelligence Unit forecasts that real GDP growth will fall from an estimated 4.6% in 2008 to 2.2% in 2009, owing to the effects of the world economic downturn, rising to 2.7% in 2010 as conditions begin to improve.
• The Mauritius rupee is forecast to depreciate to an average of MRs34.3:US$1 in 2009 and MRs35.7:US$1 in 2010 as it comes under pressure owing to the slowdown in the economy and the large current-account deficit.
• The current-account deficit is forecast to widen to 12.2% of GDP in 2009, mainly because of lower revenue from tourism and foreign investment, and to 12.4% of GDP in 2010 as imports increase with the economic upturn.

Monthly review

• The prime minister, Navin Ramgoolam, continuing to play the Mouvement socialiste militant (MSM) off against its rival, Mouvement militant mauricien, has dismissed speculation about an alliance between Labour and the MSM.
• The Bank of Mauritius has cut the repurchase (repo) rate from 6.75% to 5.75%, and the government is reported to be planning a second major fiscal stimulus after December's MRs10.4bn (US$330m) package.
• The government and the private sector have given qualified support to plans for regional trade liberalisation, their main concern being the level at which common external tariffs would be set in a regional customs union.
• Real GDP growth fell from 5.4% in 2007 to an estimated 4.6% in 2008, the slowdown being most pronounced in the final quarter of the year, largely owing to the weak performance of the textiles and tourism sectors.
• Tourist arrivals in January 2009 were 3.8% down on January 2008the third consecutive monthly fall, in one of the peak months of the year, showing how badly the sector has been hit by the economic slowdown in Europe.
• Sugar production recovered in 2008 after a bad year in 2007, although year-on-year growth of under 4% fell short of earlier expectations.
• Mauritius's current-account deficit more than doubled in 2008, to MRs27.7bn (US$975m; 10.5% of GDP)lower revenue from tourism and from foreign investments worsened the impact of the record trade deficit.

Source: Country Report

This report covers the following industry codes:
SIC Code: 37;60;70;1
NAICS Code: 336;52;72;11