Mauritius is an island state of about 1.26 million people (2022), located off the southeast coast of Africa, neighboring the French island of La Reunion. Its economy has made great strides since independence in 1968 and is now classified as an upper-middle-income economy. The country’s key challenges include managing the transition to a knowledge-based economy and adapting to the impact of climate change.
Political Context
Mauritius is one of the oldest democracies in Africa, having held 12 general elections deemed free and fair since late 1960s. Its political system is dominated by three parties, namely the Militant Socialist Movement (MSM), Labour Party, and Mauritian Militant Movement (MMM). Of a total of 12 general elections held so far, MSM has won six, the Labour Party won four, and the MMM won two. Shifting coalitions are a feature of politics in the country. The last general election took place in 2019. A coalition named Alliance Morisien won. The coalition is comprised of four parties namely MSM, Muvman Liberater ML, Alan Ganoo Movement, and Plateforme Militante. The coalition won 42 of the 70 seats in the national parliament and formed the government with Pravind Jugnauth of MSA remaining the prime minister. In Mauritius, the president is the head of state while the prime minister has full executive powers and heads the government. The next general elections are scheduled for 2024.
Civil liberties. Mauritius is rated “Free” in the 2023 Freedom House's annual study of political rights and civil liberties worldwide. It performs well on a range of other political and economic indicators, relative to many countries in the region. It is also well placed in the Corruption Perceptions Index, ranked 52 out of 180 countries, dropping four places since 2012.
Economic Developments and Forecast
Mauritius has experienced remarkable growth since independence in 1968, briefly reaching high-income country status in 2020. However, the global COVID-19 pandemic hit its economy hard. Despite its successful handling of the public health emergency, the pandemic’s economic impact was severe, and the country’s Gross Domestic Product (GDP) contracted by 14.6% in 2020, causing Mauritius to slide towards upper-middle income country status. With a gross domestic product of $10,216 per capita (2022), Mauritius’ economy has proven otherwise resilient to global economic shocks, including those stemming from the war in Ukraine, which has affected revenues from tourism arrivals. GDP growth rebounded by a relatively modest 3.5% in 2021 and accelerated to an estimated 8.3% in 2022, supported by a strong recovery in tourism despite headwinds from the war in Ukraine. GDP growth is projected to moderate to around 5.0% in 2023 as economic activities gradually return to normal.
Headline inflation reached 10.8% in 2022—the highest in over a decade—driven by external supply shocks stemming from the war in Ukraine, which increased the prices of energy and food products, of which Mauritius is a net importer. Inflation is expected to moderate progressively over the medium term, tamed by tightening monetary conditions in major trading partners, while the rollout of a new monetary policy framework in January 2023 should aid in anchoring domestic inflation expectations.
While public sector debt appears sustainable, higher financing costs are likely to reduce sovereign debt-carrying capacity. The decline of the working age population and a rising dependency ratio will increase pressure on the social protection system and the fiscal outlook in coming decades and may pose challenges to growth.
The government has introduced measures to lessen shortages in the labor market and continues to promote the use of renewable energy. Strengthening macro-fiscal institutions and pursuing fiscal consolidation, including reforming the social pension system, as well as investing in climate adaptation, will be essential to build growth resilience. Investing in human capital to address skills shortages and boosting private sector innovation will be key to regaining and sustaining high-income country status.
Last Updated: Sep 24, 2023
