Country Report Mauritius September 2009

Outlook for 2009-10

• The Alliance sociale 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 the second half of 2009 and to 5% in 2010, as revenue will be hit by weaker growth and expenditure will be swollen by 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 MRs32.6:US$1 in 2009 and MRs33.3: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 resulting from the lower cost of fuel and food imports.

Monthly review

• The Electoral Boundaries Commission will soon send its ten-yearly report to the National Assembly, in which it is supposed to recommend changes that will end the imbalance in size between constituencies in Mauritius.
• However, given the ability of parliament to veto the report by simple majority, the situation will not be remedied unless politicians in Mauritius can put democratic principle before party interest.
• The Bank of Mauritius has published a bullish Financial Stability Report, which claims that the financial system in Mauritius is stable and that economic prospects are favourable.
• The US and Mauritius have launched negotiations over a bilateral investment treaty, which could lead to significant growth in US investment in the island.
• The annual rate of inflation fell to a record low of 1.9% in July and may fall further following a reduction in fuel prices announced on August 3rd.
• The official estimate of the 2009 sugar harvest has been increased to 490,000? tonnes, 8.4% up on the 2008 harvest, owing to good growing weather so far this year.
• In the first half of 2009 tourist arrivals fell by 9.3% year on year (although arrivals from France and Reunion increased) and earnings fell by 17.7%; in March employment in the tourism sector was 6.4% down on March 2008.

Source: Country Report

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