Country Report Mauritius October 2009

Outlook for 2010-11

• The Alliance sociale (AS) coalition, which has been in government since 2005, is now well placed to be returned to office at the next general election, which is due in mid-2010.
• Re-election will be a popular endorsement of the government's liberal economic reforms and of its overall management of the economy.
• The fiscal deficit is forecast to widen to 5.8% of GDP in 2010, as expenditure will be swollen by measures to stimulate the economy; the deficit will narrow to 4.9% of GDP in 2011 as revenue picks up.
• The Economist Intelligence Unit forecasts that real GDP growth will rise from 2.5% in 2009 to 3.2% in 2010 and 3.8% in 2011 as the global economy recovers from recession.
• The current-account deficit is forecast to narrow to 9.6% of GDP in 2010 and 9.4% of GDP in 2011 as the trade deficit/GDP ratio falls and the services surplus/GDP ratio rises.

Monthly review

• The Parti mauricien sociale democrate (PMSD) has defected from its opposition alliance with the Mouvement militant mauricien (MMM) and the Union nationale to join the AS.
• Two smaller parties in the AS, Parti mauricien Xavier-Luc Duval and Mouvement republicain, have joined with the PMSD, reviving the old "blue" alliance and making the AS alliance the strongest contender in the election.
• The MMM and its opposition rival, Movement socialiste militant, now have no credible strategy for fighting the election, as they have refused to consider a coalition between themselves.
• In the run-up to the budget in December, the Bank of Mauritius has claimed that the economy is recovering as a result of the relaxation of monetary policy and expansionary fiscal policy.
• According to the World Bank, Mauritius remains the best place in Sub-Saharan African to do business, and, according to the World Economic Forum, is the region's second most competitive economy.
• GDP growth recovered to 2.3% in second-quarter 2009, boosting hopes of economic recovery in 2010, and the annual rate of inflation fell to a record low of 0.9% in September.
• Mauritius's trade deficit fell by 24% year on year in the first half of 2009, mainly owing to lower world oil and food prices, although key domestic export sectors—clothing, sugar and fish—also performed well.