Overview

  • Located off the southeast coast of Africa, neighboring the French island of La Reunion, Mauritius is an island state of 1.3 million inhabitants. It possesses an immense maritime territory of over 1 million square kilometers. The country’s political and economic situation has been stable since independence in 1968, but its environment place it at great risk from climate change and rising sea levels.

    Economic Overview

    Mauritius’ economy has expanded at a consistent and moderate pace in recent years, broadly in line with that of its potential output (GDP growth was 3.8% in 2016). Growth has been led by the service sectors, especially expanding financial services and tourism, but with substantial contributions also from other services sectors (ICT, real estate, and retail trade). The main drag on its economic growth has been the contract textile sector (which subtracted 0.3 percentage points from GDP in 2016). On the expenditures side, private consumption growth has been steady at around 3%, while investment has begun to pick up again after slumping to a record low share of GDP (17.3% in 2016).  Consumer price inflation had been subdued, averaging 2.3% in 2016, but surged in mid-2017; the CPI rose by 6.4% year-on-year in June 2017. This increase was driven mainly by higher vegetable prices (due to poor weather). Core inflation measures remain at moderate levels but also show some upward momentum. 

    The external position of the economy has remained solid. The current account deficit has compressed sharply in recent years, to 4.6% of GDP in 2016 (compared to an average of around 8% over the last decade), reflecting a shrinking goods trade deficit (supported by lower global commodity prices which reduced import costs), and strong tourist spending. External financing has continued to be supported by large net direct investment inflows from the offshore corporate sector, and gross international reserves have risen steadily, to $5.3 billion in June 2017, equivalent to approximately 9 months of imports.

    Outlook

    The economy is projected to expand at a similar pace to that of recent years, which is broadly consistent with the estimated current pace of potential output growth. This baseline incorporates some fiscal drag, in line with official medium-term projections, as the government seeks to reduce its fiscal deficits to reduce the gross public sector debt burden. Growth may exceed the baseline projection if the government’s ambitious public infrastructure program gathers pace and crowds in more private investment—though, in this case, monetary policy, currently highly accommodative, would likely need to tighten significantly to prevent the economy from over-heating. Conversely, growth may underperform (relative to the baseline) if there is significant under-execution of public investment, as has been the case in recent years, and if the recent supply-side driven increase in inflation proves to be persistent and necessitates a policy response.   

    The public debt burden is significant, at approximately 65% of GDP, but debt sustainability risks remain well-contained based on the latest estimates. Mauritius’s risk profile benefits from low external public debt (of about 25% of GDP), comprising mostly concessional, long-maturity borrowing. The government’s medium-term fiscal framework targets a modest reduction in debt-GDP to 60%.

     

    Political Context

    Mauritius is a stable, multiparty, parliamentary democracy. Shifting coalitions are a feature of politics in the country. The president is the head of state and the prime minister has full executive powers and heads the government. The legislative elections held in December 2014 were won by the Alliance Lepep, a coalition comprising the Militant Socialist Movement (MSM), the Mauritian Social Democrat Party (PMSD), and the Liberation Movement. The coalition secured a comfortable parliamentary majority with 53 out of 69 seats. The MSM founder, Anerood Jugnauth, become Prime Minister (PM).

    In January of 2017, following the resignation of then-PM Jugnauth (86), the Finance Minister, Pravind Jugnauth (son of Anerood), became PM, in accordance with a constitutional rule that states the leader of the largest party in parliament succeeds a sitting prime minister who resigns during his/her term. The new PM reshuffled the Cabinet, but retained the Finance portfolio. The government is about halfway through its expected term, with the next elections due by the end of 2019.

    Development Challenges

    Mauritius’ relatively large offshore sector faces the challenges of adapting to a fast-changing global regulatory environment and, in particular, to revisions to the country’s double taxation avoidance agreement with India, which have begun to take effect. The industry and its regulators are engaging these shifts and have ambitious plans to re-position Mauritius as a regional financial hub. But uncertainties over the outlook of the financial sector may weigh on activity, which could spill over into the wider economy.  

    Over the long term, Mauritius faces the challenge of sustaining its historically inclusive growth model, while progressing in its goal of becoming a high-income economy. This will require lifting the performance of the education system, addressing constraints to labor productivity growth (including persistent gender gaps in the labor market), and investing sustainably and efficiently to improve public infrastructure. A key challenge is to address gender disparities; despite relatively strong female educational attainment, the gender wage gap is stubbornly wide at about 30% in the private sector, and the female labor participation rate is strikingly low (32 percentage points lower than males in 2015).   

    Last Updated: Dec 04, 2017

  • World Bank Group Engagement in Mauritius

    The World Bank Group (WBG)’s role in Mauritius is evolving, reflecting the country's success in gaining access to capital markets. Because of its relatively high income, Mauritius is one of only a few African countries eligible for International Bank for Reconstruction and Development (IBRD) assistance. While demand for Bank financing has shrunk from previous levels of IBRD lending, averaging over $60 million per year from FY07-FY13, demand for knowledge support is on the rise.

    The WBG has completed its new strategy of engagement with Mauritius, known as the Country Partnership Framework (CPF) for the period Fiscal years 2017–21. The preparation of the strategy was built on the findings of WBG’s Systematic Country Diagnostic (SCD), which assessed the country’s binding constraints to growth and poverty reduction, as well as its opportunities.

    The CPF seeks to assist Mauritius to address its national priorities, with a focus on promoting shared prosperity in a sustainable manner. It proposes an indicative lending pipeline of $25 million. This amount represents planned financing in support of the Accelerated Program for Economic Integration, and the Southwest Indian Ocean Regional Fisheries/Blue Economy Investment project. Other lending will depend on country demand and overall performance during the CPF period, as well as global economic developments that affect IBRD’s financial capacity and demand from other IBRD borrowers.

    Last Updated: Dec 04, 2017

  • Most of the World Bank’s support to Mauritius is provided through knowledge activities, including technical assistance. Mauritius views regional integration as part of its overall development strategy to enhance economic growth and achieve sustainable development. Thus, the World Bank has been supporting Mauritius achieve its regional priorities, including the “Ocean Economy,” which aims at the sustainable use of ocean resources. At the request of the Government of Mauritius, the World Bank is compiling analytical work on Building the Ocean Economy (OE), which will assess and quantify the short-, medium-, and longer term potential of the OE to contribute to GDP growth and employment creation, while identifying the challenges to be tackled. The recent Bank co-organized African Ministerial Conference on Ocean Economies and Climate Change has positioned Mauritius to take an international leadership role in this area.

    With support from the WB, Mauritius has emerged not only as an exporter of “how to reform” expertise to peer African governments, but also as an importer of inbound knowledge services in selected areas of their reform program.

    Last Updated: Dec 04, 2017

  • The World Bank maintains regular dialogue with bilateral and other multilateral development partners active in Mauritius. 

    Last Updated: Dec 04, 2017

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Additional Resources

Country Office Contacts

Main Office Contact
+230 203 2500
Maputo, Mozambique
Rafael Saute
Sr. Communications Officer
Av. Kenneth Kaunda, 1224
Maputo, Mozambique
+258-21-482-944
rsaute@worldbank.org
Washington
Thomas Buckley
Country Program Coordinator
1818 H Street NW
Washington, DC 20433
+1-202-473-0075
tbuckley@worldbank.org