Country Report Mauritius February 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 4.7% 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 5.2% in 2008 to 2.3% 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 MRs32.97:US$1 in 2009 and MRs34.26:US$1 in 2010 as it comes under pressure as a result of the slowing of economic activity and the large current-account deficit.
• The current-account deficit is forecast to widen to 11.1% of GDP in 2009, owing to sharply lower revenue from tourism, and narrow to 10.8% of GDP in 2010 as the markets generally begin to recover.

Monthly review

• The prime minister, Navin Ramgoolam, has said that none of the parties in the AS will contest the forthcoming by-election, and may call on government supporters to back Mouvement socialiste mauricien (MSM).
• Mr Ramgoolam is trying to drive a wedge between the MSM and Mouvement militant mauricien, which could lead the MSM into an alliance with the AS.
• Mr Ramgoolam is being partly blamed for Air Mauritius's oil-price hedging deal, which is expected to lose the airline US$150m and has led to the resignation of the airline's president, an appointee of the prime minister.
• The government has provided financial guarantees to avoid the bankruptcy of the airline but is insisting on major restructuring and cost cuts.
• A survey of economic freedom by the Heritage Foundation and The Wall Street Journal has ranked Mauritius first in Sub-Saharan Africa and 18th out of 179 countries worldwide, reflecting the economic reforms of recent years.
• In December 2008 the annual rate of inflation fell to 6.7% from its peak of 11.7% in August, owing largely to lower global prices for fuel and food.
• The State Trading Corporation expects to lose US$89m in first-half 2008 as a result of an oil-price hedging deal similar to that of Air Mauritius.
• Owing to the global economic downturn, tourism has continued to suffer: visitor numbers fell by 6.1% year on year in December, taking growth for 2008 as a whole to 2.6%, compared with 15.1% in 2007 and an official target of 7.5%.

Source: Country Report

This report covers the following industry codes:
SIC Code: 70
NAICS Code: 72