Authors: Ndoli Kalumiya, Asha P. Kannan
- The Mauritian economy maintained real growth of 3.2% in 2014, the same as that achieved in 2013, and growth is forecast to strengthen to 3.5% in 2015 and 3.6% in 2016 on the back of increased domestic investment and stronger external demand.
- Mauritius maintained its position as the most competitive economy in sub-Saharan Africa and witnessed a smooth political transition following parliamentary elections in December 2014.
- The country’s relatively small geographic size and high population density means that government and non-state actors in Mauritius are in close collaboration to ensure sustainable spatial development plans for the island-economy.
Recent Developments & Prospects
Economic Cooperation, Regional Integration & Trade
Economic & Political Governance
Public Sector Management, Institutions & Reform
Natural Resource Management & Environment
Thematic analysis: Structural transformation and natural resources
Real GDP growth in 2014 was lower than expected at 3.2%, well under the 4% projected in the 2014 National Budget. Economic growth in 2013-14 was driven by the information and communications technology (ICT) sector and by the financial and insurance sector, which grew by 6.8% and 5.4%, respectively. These gains were partially offset by the poor performance of the construction sector, which contracted by 9.4%. The government’s fiscal stance in 2014 remained expansionary, with the budget deficit increasing to 3.6% of GDP, compared with 3.5% recorded at the end of 2013. The Bank of Mauritius (BoM) maintained the key repo rate (KRR) at 4.65% throughout 2014. Year-on-year headline CPI peaked at 4.5% in March 2014, against the backdrop of public sector wage increases and higher food prices, and then slowed to 3.2% by September 2014, on the back of falling energy prices. Export growth contributed 4.4% to GDP, up from 3.5% in 2013. Mauritius’ current-account deficit stood at 8.2% in 2014, mostly driven by a drop in net income from service exports.
The Government of Mauritius (GoM) has drawn up an economic “blue-print” offering a strategic vision for a more diversified and resilient economy and an action plan to achieve High Income Country status by 2025. The “blue-print” plan calls for economic growth of 8-9% per annum and an upward growth trajectory in ICT, the seafood and marine industry, as well as the financial, business and biomedical services sectors. The implementation of the Maurice Il Durable Program and Action Plan – which provides the framework for “green growth” and sustainable development of the island – and that of the “Blue” Economy, which involves harnessing the oceanic resources to strengthen Mauritius’ competiveness through innovation in areas such as deep-sea water exploitation, bio-pharmacy and renewable energy, could contribute to a 1% rise in the GDP within the next two years. While inflation is expected to remain subdued in the short-to-medium term, at less than 4%, the structural deficit of the current account remains a major concern. To further counter the current account deficit, policies should be adopted to encourage national savings and foster competitiveness that will help build human capital and infrastructure.
Mauritius has a very high population density with some 618 people per square km. This situation has resulted in great pressure on the limited land resources. To address the problems resulting from acute urbanisation, the government produced a framework for spatial planning in Mauritius which is contained in the National Development Strategy (NDS). The NDS provides the basis for land use planning. It sets out the guidelines for sector development and local plans and policies for the nine administrative districts, based on international spatial planning practices.
Table 1: Macroeconomic indicators
|Real GDP growth||3.2||3.2||3.5||3.6|
|Real GDP per capita growth||2.8||2.8||3.2||3.3|
|Budget balance % GDP||-3.5||-3.6||-3.3||-3.6|
|Current account balance % GDP||-8.9||-8.2||-5.9||-7.1|
Source: Data from domestic authorities; estimates (e) and projections (p) based on authors’ calculations.