Mauritius is an island nation of 1.3 million people with a GDP of US$13.5bn. It has previously been a colony of France and the UK, and to quote a resident, citizens “speak English, write in French and think in Creole”.
The nation has developed from a low-income, agricultural producer to a diversified, middle-income earner with emerging industrial, financial, business outsourcing and tourism sectors. It has positioned itself as a base for investment in Africa by scrapping exchange controls so that profits can be freely expatriated, and has establish double taxation treaties with most African nations. The services sector accounts for around 75% of GDP.
Drastic and fast action by the government to lock down and isolate the island saw it record only 315 cases and 10 deaths from COVID–19 between January and December 2020. But this came at a high cost for the economy. In just one year, Mauritius lost 18 percentage points of growth. Real GDP was estimated to contract by 15% in 2020, against real GDP growth of 3% in 2019.
The medium-term outlook is for a strong recovery, with real GDP growth projected to average 7.1% over the next two years. The fiscal deficit is projected to widen to 10.8% of GDP in 2021, fuelled by high public investment and continued support to businesses and jobs. The deficit will narrow in 2022 to 5.0%, with economic recovery supporting growth in tax revenues. The current account deficit is projected to improve on the back of an improvement in the trade balance and a gradual recovery in tourist receipts as air links resume between Mauritius and Europe, the main source of tourists. Inflation is projected to rise, averaging 3.4% over the medium-term as domestic demand increases.
Sources: Who Owns Whom Industry reports, African Development Bank
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