We forecast modest real GDP growth in Mauritius will in 2015 and 2016, bolstered by falling oil prices, expansionary fiscal policy, and a recovery in investment. We forecast growth of by 3.7% and 4.1% in 2015 and 2016 compared to our previous forecasts of 4.4% in 2015 and 4.8% in 2016.
Risks to political stability should be limited in the short-term, as the recently-elected government overseas a period of accelerating economic activity.
The government is set to put an emphasis on spurring economic growth ahead of fiscal consolidation, meaning an increase in the budget deficit is likely in the short term. This is unlikely to pose a serious threat to broader economic stability in itself, though higher deficits and rising public debt will leave the country more vulnerable to external shocks of shifts in investor sentiment.
Major Forecast Changes
Our 2016 real GDP growth forecast has been downgraded from last quarter's projection of 4.2%, to 3.7%.
We are looking for the fiscal deficit to expand by 4.3% of GDP in FY2015/16, compared to our previous estimate of 3.5% of GDP
Risks To Outlook
While we expect the eurozone recovery to strengthen in 2015, a significant deterioration in conditions would pose notable risks to our growth outlook given Mauritius's exposure to the region. France in particular gives cause for concern given its macroeconomic weaknesses and political failure to deal with them.
A lower than expected growth outturn during 2015 would increase the likelihood of a rate cut by the central bank.
The recent uncovering of corruption scandals could harm the credibility of both the political class and the financial sector, both critical for the country's economic outlook.
|e/f = BMI estimate/forecast. Source: National Sources|
|Real GDP growth, % y-o-y||3.2||3.6||3.7||4.1|
|Nominal GDP, USDbn||11.9||12.6||11.6||12.0|
|Consumer price inflation, % y-o-y, eop||4.0||0.2||2.5||4.5|
|Exchange rate MUR/USD, eop||30.05||31.75||35.40||35.80|
|Budget balance, % of GDP||-3.5||-3.3||-4.3||-4.5|
|Current account balance, % of GDP||-9.9||-5.5||-6.6||-6.3|
The Mauritius Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Mauritius. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.
An influential new analysis of Mauritius's economic, political and financial prospects through end-2019, just published by award-winning forecasters, BMI Research.
- Forecast the pace and stability of Mauritius's economic and industry growth through end-2019.
- Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
- Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
- Contextualise Mauritius's country risks against regional peers using BMI's country comparative Risk Index system.
- Evaluate external threats to doing business in Mauritius, including currency volatility, the commodity price boom and protectionist policies.
BMI provides our fully independent 5-year forecasts for Mauritius through end-2019 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.
Economic Outlook Contents
The Mauritius Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019, set against government views and BMI's evaluation of global and regional prospects.
Key Areas Covered:
- Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
- BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.
- Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
- Balance of Payments - trade and investment, current and capital account.
- Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
- Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
- Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
- Foreign Direct Investment - approvals, inflows and climate.
- External Debt - debt profile (short and long-term plus public and private sector obligations).
- Global Assumptions - forecasts for each year to end-2019 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.
- Rely upon BMI's 100% independent forecast scenarios for Mauritius and underlying assumptions - we take no advertising and are privately-owned.
- Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Mauritius, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
- Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.
What are the political risks to doing business in Mauritius over the next 5-years?
BMI's Mauritius country Risk Index evaluates the short- and medium-term threats to political stability.
Political Outlook Contents
- SWOT Analysis for the Mauritius Market - Political Strengths, Weaknesses, Opportunities and Threats facing Mauritius.
- Political Stability and Risk Assessment - BMI's Risk Index assesses explicit short- and long-term risks to political stability; latest positioning and trends for Mauritius's risk are compared with regional and global averages.
- Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.
- Long-Term Political Outlook BMI examines the structural risks to the stability of Mauritius’s political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the state could evolve in the medium to long term.
- Benchmark Mauritius's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
- Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
- Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.
What are the current operational risks and difficulties associated with doing business in Mauritius?
The Operational Risk section gives an evaluation of current risks and difficulties associated with operating in the market. It also provides a brief overview of the regional Operational Risk Index which benchmarks Mauritius against its neighbours.
Operational Risk Contents
The chapter provides a summary of the main threats in the country, within:
- Labour Market Risk (Education; Availability of Labour; and Labour Costs)
- Logistics Risk (Market Size and Utilities; Quality and Extent of the Transport Governance)
- Trade and Investment Risk (Economic Openness; Government Intervention; and Legal Risks)
- Crime and Security Risk (Crime; Terrorism; and Interstate Conflict risks).
The report also drills down in greater depth to address key issues in one of the following segments most critical to the market:
- Transport network, economic openness, cost and availability of labour, crime risks, bureaucratic environment, market size and utilities, and interstate conflict.
- Assess your company’s exposure to country specific operational and business risks, using BMI’s insight on the current dangers of operating in the market.
- Evaluate Mauritius’s risk profile against its regional peers, helping you understand the market’s strengths and weaknesses in relation to other countries.