Mauritius covers a surface area of 2,040 square kilometers with an estimated population of 1.3 million and a population density of 635 individuals per square kilometer. With a population growth rate estimated at 0.4%, official projections show that Mauritius will soon face the ageing population syndrome (the population 60 years of age and over is projected to increase from 9% in 2000 to 23% by 2040). Ethnically, the country is made up of a majority of people of Indian descent and individuals of African, European and Chinese descent. The spoken languages are English, French and Mauritian Creole.
Mauritius enjoys a relatively stable political landscape. The country has a multiparty parliamentary democracy. The President is the Head of State while the Prime Minister has full executive powers and heads the Government. The Mauritius Labour Party under the leadership of the current Prime Minister Dr. Navinchandra Ramgoolam, won the general elections of May 2010 and formed a coalition government with the Parti Mauricien Social Democrate (PMSD) and the Mouvement Socialiste Militant (MSM). The next legislative elections will take place in 2015.
Mauritius is considered an upper middle income country with a gross national income (GNI) per capita at US$9,227 (2013). The poverty rate, whether measured as relative poverty, absolute poverty, or with respect to food poverty, is low (8.7% when using the relative poverty measure, which is low compared to the average in Sub-Saharan Africa). Despite its small size, regional variations in poverty exist in Mauritius, with incidence of relative poverty higher in urban areas.
The Mauritian economy is still performing reasonably well. Growth in 2013 was 3.2% and 3.3% in 2014, revised downwards from the 3.8% forecast in the 2014 budget, due to contraction in textile and construction sectors. Overall the macroeconomic policies are supportive of sustainable growth at current rates, although fiscal consolidation may need to be accelerated further to meet Government’s debt-to-GDP target of 50% by 2018.
Monetary policy is supporting economic growth given stable inflation at 4.3% and the need to stimulate domestic demand. A relatively large current account deficit is comfortably financed by financial flows and Foreign Direct Investments. The current account deficit has widened to an estimated 9.1% of GDP in 2013. While exports of goods are performing well, tourism earnings are declining
The country is ranked high in terms of competitiveness, investment climate and governance. The World Economic Forum’s global competitiveness index ranked Mauritius at 45 out of 148 countries in 2013-2014, ahead of all African countries. It topped the 2014 Mo Ibrahim Index of African Governance. Mauritius has solid economic fundamentals and high standards of governance and a business friendly environment (ranked 20th globally in the 2014 World Bank Doing Business report).
The remarkable performance of the economy is attributed to sound economic governance, accelerated reforms to sustain long-term growth and effective State-business relations. These factors together with timely and targeted responses helped Mauritius to weather the negative effects of the global crisis.
Mauritius has a successful development record, but many challenges remain. The external shocks demonstrated the heavy reliance of the economy few sectors and markets. However, Mauritius is not yet ready to fully take advantage of the global re-balancing of export markets. It is not yet well integrated in the production chain and final markets of those countries which are bound to increase domestic absorption (particularly in Asia).
The main challenges of the country are the:
- Infrastructure system - mainly in terms of road congestion and water delivery;
- Scarcity of skilled human resources due to limited capacity to reform the traditional education system, the country’s brain drain and the limited ability to make use of the large diaspora community; and
- Large and relatively inefficient public companies and parastatals.
Mauritius is set to accelerate the reforms to diversify the economy, both in terms of climbing the value chain and reorienting exports toward emerging markets. Reforms with regards to trade barriers, education and infrastructure will be crucial to achieve this. Moreover, the acceleration of fiscal consolidation is essential to achieve substantial efficiency gains in the budget and ensure effective expenditure in priority areas, most notably, by strengthening the social safety net system to cope with the poverty impact of a potential downturn which would fuel unemployment.
Last Updated: Oct 10, 2014