Economic Overview

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Mauritius has had low but steady growth rates over the last few years (averaging 3.8% during 2015–19) and is among the most dynamic economies in Sub-Saharan Africa. Nevertheless, the COVID-19-induced crisis took a severe toll on the Mauritian economy: although the country did not record many cases, the GDP plummeted by an estimated 14.9% in 2020 (IMF), mostly due to the international travel restrictions which prompted a collapse in tourism arrivals (the sector contributes around one-fifth of GDP and accounts for 22% of employment with significant spillover effects on the whole economy – African Development Bank). The recovery in the tourism sector was subdued in 2021 (arrivals in the first half of the year were less than 2% of 2019 levels); nevertheless, the construction, ICT, financial and insurance sectors had a positive contribution, with GDP growing an estimated 5% over the course of the year.  In 2022, a revival in the tourism sector is expected to push growth to 6.7% this year, followed by 4% in 2023 (IMF).

The country had been progressively reducing its debt-to-GDP ratio in recent years; however, the trend reversed, with the ratio reaching 101% in 2021 (from a pre-pandemic level of 84.6%) as the government took on more debt to finance its budget. However, such debt is almost exclusively denominated in local currency and three-quarters of it is domestic. The IMF forecasts the ratio to remain stable over the forecast horizon. Higher revenue collection contributed to a reduction in the FY2020-21 budget deficit, which stood at 7.8%. It is expected to follow a downward trend in 2022 (4.6% - IMF). Moreover, an increase in food and transport costs prompted a rise in inflation, which doubled from 2.5% in 2020 to 5.1% in 2021. Higher energy prices should bring the rate to 6.6% this year before it decreases to 3% in 2023 as per the IMF forecast. Overall, the country’s economy is driven by the services sector, which accounts for around 68.2% of GDP, with tourism (catering, accommodation, leisure, etc.) and financial services being the most vital sectors for the economy. The country's economy is diversified and also relies on its offshore financial activity, textile industry and production of sugarcane. Medical tourism, outsourcing, new technologies and the luxury industries are among developing sectors. Overall, the industrial sector accounts for 16.7% of GDP, while the agricultural sector contributes around 3.4% (World Bank). Furthermore, Mauritius enjoys political stability.

The island of Mauritius has made substantial progress in its campaign for social equality and poverty reduction, and represents an exemplary model of development. The island is classified as an upper-middle-income country by the World Bank, with a high Human Development Index, and is seeking to become a high-income country within the next decade. According to the IMF, GDP per capita (PPP) reached almost USD 22,030 in 2021, the second-highest in Africa after Seychelles. Despite government fiscal support, including wage subsidies, unemployment increased since the outbreak of the COVID-19 pandemic – mostly as a consequence of the downturn of the tourism sector - reaching 10.5% in the first half of 2021 (Coface). Female labour participation is significantly low compared to male labour participation and youth unemployment stands around 25%.

Foreign Trade

Mauritius has a liberal economic and trade policy, with a trade-to-GDP ratio of 78.7% (World Bank, 2020 – latest data available). The country is a member of the WTO, as well as other regional economic groups (COMESA, SADC, IOC). Mauritius aims to transform the island into an open and globally competitive economy and to fully integrate it into the world trade system through its trade policies. Comparatively, the island does not have many trade barriers and customs duties are low (the average applied tariff is only 0.92%). In 2020, Mauritius exports were led by prepared or preserved fish, cane or beet sugar (sugarcane occupies 85% of the country's cultivated land), and clothing (mainly t-shirts, shirts and suits); while the country imported chiefly petroleum products, frozen fish, cars, medicaments and radio transmission equipment.

The country’s main trading partners are South Africa (11.8% of the total), France (11.4%), the United Kingdom (10%), the United States (9.7%), and Madagascar (6.8%); with imports originating in China (16.6%), the UAE (12.3%), India (9.5%), South Africa (7.7%), and France (7.3%).

Mauritius imports more than it exports, resulting in a structural trade deficit. In 2020, both export and imports of merchandise decreased as a consequence of the global crisis triggered by the COVID-19 pandemic. While imports stood at USD 4.2 billion (-24.3% year-on-year), exports decreased at a slower pace (-19.4%), totalling USD 1.8 billion. Traditionally, the country is a net service exporter, thanks to its tourism sector. Nevertheless, in 2020 the balance of trade in services turned negative (USD 1.298 billion of commercial services export against USD 1.311 billion of imports - data by WTO). When computing both goods and services, Mauritius’ trade deficit stood at 18.7% of GDP in 2020 (from 15.2% one year earlier - World Bank). According to the latest data from Statistics Mauritius, total merchandise export proceeds for the year 2021 were valued at MUR 82,105 million, representing an increase of 16.9% over the 2020 figure, thanks to increases in “Manufactured goods classified chiefly by material" (+27.5%), “Miscellaneous manufactured articles" (+24.0%) and “Food and live animals" (+1.9%). As per imports, they reached MUR 215,186 million, representing an increase of 29.8% year-on-year.