Country Report Mauritius June 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% in 2010, 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 4.6% in 2008 to 2.2% 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 MRs33.5:US$1 in 2009 and MRs34.8: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 widen to 11.3% of GDP in 2009, mainly because of lower revenue from tourism and foreign investment, and to 11.4% of GDP in 2010, as imports increase with the economic upturn.

Monthly review

• Following a strongly expansionist budget on May 22nd, speculation is growing that next year's general election will be brought forward.
• The leader of the opposition, Paul Berenger, has called on all parties to reject pre-election alliances and to agree on the introduction of some form of proportional representation in time for the next election.
• In his budget speech the minister of finance and economic empowerment, Rama Sithanen, acknowledged that the economic slowdown would be greater than expected and announced further measures to safeguard jobs.
• The budget sets out plans for investing MRs172.2bn (US$5.2bn) in a wide range of transport and other infrastructure projects over the coming years, including some large public-private partnership projects.
• MrSithanen has announced new measures to support vulnerable sections of society and a "solidarity levy" on profitable companies to help finance the aims of the budget: saving jobs, protecting people and preparing for recovery.
• The budget deficit is set to rise to 5% of GDP in 2010, but the next budget in December could provide the opportunity for corrective action.
• The value of imports fell by 17.5% in the first quarter of 2009, largely because of falling world food and oil prices; as a result, the trade deficit fell to MRs11bn, the lowest level for two years.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60
NAICS Code: 52