Country Report Mauritius March 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 5.2% 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:US$1 in 2009 and MRs35.4: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 10.2% of GDP in 2009, mainly on account of sharply lower revenue from tourism, and to 10.4% of GDP in 2010 as the income and transfers surpluses narrow.

Monthly review

• The leader of Mouvement socialiste militant (MSM), Pravind Jugnauth, won a decisive victory in a by-election on March 1st, with help from the Labour Party and backing from the prime minister, Navin Ramgoolam.
• This is a defeat for the leader of Mouvement militant mauricien, Paul Berenger, who had supported the losing candidate, but a triumph for MrRamgoolam, who might now consider an alliance with the MSM.
• China's president, Hu Jintao, paid a state visit to Mauritius in mid-February.
• The IMF expects GDP growth in Mauritius to fall to 2% in 2009 and welcomes the government's fiscal stimulus package, but advises careful management to limit fiscal and balance-of-payments pressures.
• The Bank of Mauritius has warned that rapid depreciation of the rupee against the US dollar threatens to reintroduce inflationary pressure.
• The World Bank has approved a five-year US$18m loan to improve public enterprise efficiency and the business environment in Mauritius.
• In February year-on-year inflation fell to 4.6% from its peak of 11.7% in August 2008, largely owing to the fall in world fuel and food prices.
• Mauritiuss trade deficit grew by 25% to MRs64bn (US$1.9bn) in 2008, but there are signs that the deterioration in the trade balance is easing.
• Mauritius and South Africa have signed an agreement to boost economic co-operation and counter any protectionist moves in developed countries.

Source: Country Report

This report covers the following industry codes:
SIC Code: 48;10;60
NAICS Code: 517;212;11;52