Country Report Mauritius July 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, which is due in mid-2010.
• The fiscal deficit is forecast to widen to 4.8% of GDP in second half 2009 and 5% of GDP in 2010, as revenue will be hit by weaker 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 5.3% in 2008 to 2.3% in 2009, owing to the effects of the world economic downturn, rising to 3.1% in 2010 as conditions begin to improve.
• The Mauritius rupee is forecast to depreciate to an average of MRs33:US$1 in 2009 and MRs33.8: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 narrow to 9.7% of GDP in 2009 and 9.6% of GDP in 2010 because of a decline in the trade deficit due to the lower cost of fuel and food imports.

Monthly review

• The prime minister, Navin Ramgoolam, has dismissed speculation that he was considering an early general election, insisting that it will be held in 2010.
• The leader of the Mouvement socialiste militant (MSM), Pravind Jugnauth, has levelled a scathing attack against the minister of finance, Rama Sithanen, in a possible bid for Mr Sithanen's job after the election.
• Mauritius is seeking precautionary budgetary support loans from the African Development Bank and the IMF against the possibility of a budget overrun.
• The Bank of Mauritius expects growth to increase in the second half of 2009 but has warned of the risk of higher inflation due to rising world oil prices and exchange-rate movements.
• Real GDP growth slowed to 2.7% in the first quarter of 2009, largely owing to a contraction in textile manufacturing, tourism and construction.
• The annual rate of inflation rose slightly to 3.3% in June, following an increase in controlled petrol and diesel prices early in the month; there are fears that a continued rise in world oil prices could accelerate this trend.
• The 2009 sugar harvest has made a strong start, and this year Mauritius will start exporting higher-value refined sugar to Europe.
• The current-account deficit fell by two-thirds in the first quarter of 2009, owing to a sharp fall in the cost of imports and despite smaller surpluses on the services and income accounts.

Source: Country Report

This report covers the following industry codes:
SIC Code: 37;60;48;49;2834;80;47;1;15;10;70
NAICS Code: 336;52;517;22;3254;62;48;11;23;212;72