Mauritius Economic Snapshot, 2019

Economic structure - Mauritius has gone through a tremendous economic transition, from a low income agricultural based economy to a diversified upper middle-income economy with strong growth in the industrial, financial and tourism sector. Agriculture occupies nearly half of the island nation’s land area, and sugar cane cultivation remains the main agricultural activity. The manufacturing sector is dominated by sugar milling, food processing, and textiles, but the government has adopted numerous initiatives to support the diversification of the sector. As a popular tourist destination, the country has attracted considerable interest from foreign property buyers, which has not only resulted in a construction boom in recent years, but also in notable development in the real estate sector. The island nation chiefly depends on imported petroleum products to meet most of its energy requirements since no oil, natural gas or coal reserves are available locally. The country has a very sophisticated banking system with several foreign banks operating in the local economy and one of the most advanced telecom sectors in Africa.

Recent economic developments – Following a period of swift growth, Mauritius’s tourism industry has been in the doldrums in 2019. The number of tourists visiting the island nation’s shores between January and September declined by 2% compared to the same period in 2018, according to latest figures from Statistics Mauritius. Tourists visiting Mauritius are primarily European, accounting for 60% of all tourists. Looking at the regional breakdown for arrivals, declines in some of the traditionally large tourism partners, namely China, India, the UK and South Africa have weighed heavily on total arrivals. The slowdown in arrivals from these countries reflects their respective weaker disposable incomes and currencies. Meanwhile, travellers from some wealthy European countries such as France, Italy and Switzerland have been more resilient to the global economic slowdown. Furthermore, arrivals from Saudi Arabia have soared thanks to new direct flights from this country. The decline in travel services will narrow the surplus on the services balance of the current account, and will also bite into real GDP growth and government revenue.

Foreign investment – Gross FDI inflows (excluding the Global Business sector) into Mauritius have been estimated at Rs10.7bn for H1

2019. The vast majority of inflows in H1 2019 were into the real estate industry and the health care industries. The EU accounted for 47% of total FDI inflows in H1 2019, followed by South Africa with 23% and China with 7%. Mauritius is expected to maintain FDI interest in finance and real estate over the medium term, and attract increased future investment in nascent industries, such as ICT, renewable energy and the maritime economy. On the other hand, global uncertainty, and certain changes to income taxes and global business sector regulations are expected to have a mildly adverse effect on FDI in the financial industry. We estimate that net FDI will increase to $304.1m in 2019 from $288.2m in 2018.