MAURITIUS

Key conditions andchallenges

Table 12023

Population, million

1.3GDP, current US$ billion

14.8

GDP per capita, current US$11665.2
a1.8

a

13.5

Lower middle-income poverty rate ($3.65)
Upper middle-income poverty rate ($6.85)
Gini index

a36.8

School enrollment, primary (% gross)b102.9b73.7

Total GHG emissions (mtCO2e)7.6Life expectancy at birth, years

Source: WDI, Macro Poverty Outlook, and official data.
a/ Most recent value (2017), 2017 PPPs.
b/ Most recent WDI value (2021).

Mauritius sustained strong growth ofnearly 6 percent in 2023, supported by
tourism and aggregated demand, particularly household consumption and investment. Medium-term growth is expected
to be supported by public infrastructure,social spending, and residential investments. The poverty rate is projected to
decline from ten percent in 2023 to seven percent by 2026. However, the outlook faces substantial downside risks,
including fiscal pressures related toelections, weather shocks, and a weakerglobal economic outlook.

Mauritius has experienced a remarkable
growth trajectory. The economy transitioned from a low-income monocrop producer of sugar cane to an upper-middleincome investment and tourism hub. Per
capita GDP surged from US$260 in 1968 toUS$9,063 in 2021. After it briefly reachedhigh-income status in 2020, the severe 14.5
percent contraction in real GDP caused by
the COVID-19 pandemic pushed the country back into the upper-middle-income category. Yet, Mauritius has demonstrated
resilience, recovering strongly after thepandemic and weathering external
shocks well, and is on track to return tohigh-income status.
However, addressing structural challenges
and macroeconomic vulnerabilities isneeded for Mauritius to achieve and sustain high-income status. Labor and skills
shortages have contributed to declines inmanufacturing export competitivenessand constrained private sector growth anddiversification. Reliance on imported fossil
fuels, as well as high exposure to climate
shocks, are key sources of vulnerability.
An aging population and social spending
commitments limit fiscal space to support
growth and implement countercyclicalpolicies. Poverty (upper-middle-income
country threshold of US$6.85 a day, 2017
PPP) fell from 19 percent to 11 percent between 2012 and 2019. However, given thedramatic contraction of GDP in 2020,

poverty is projected to have increased byover 5 percentage points (reaching 16 percent) and to have retreated to around nine
percent by 2024.
Increasing productivity requires prioritizing skills availability and development,
improving labor market institutions, andfostering women’s participation. Safeguarding the integrity and trust of thecountry’s financial services is crucial forcontinuing to attract foreign investments.
Additional efforts are needed to further
bolster macroeconomic resilience, including rebuilding fiscal buffers, increasing
revenue, improving efficiency in social
spending, and improving quality in education and innovation. Policies tostrengthen resilience against natural hazards and climate change are fundamental
to supporting sustained growth.

Recent developments
Real GDP grew by an estimated 6.8 percent in 2023, supported by a strong rebound in tourism, construction activities, and financial services. Gross fixed
capital formation increased by 23 percent in 2023Q3 (yoy), supported by social housing and infrastructure programs. Meanwhile, consumption spending grew modestly by 2.2 percent due
to a lower government wage bill.
The labor market has recovered significantly, with the unemployment rate declining to 6.3 percent in Q3, below thepre-pandemic level. To meet the high demand for labor and skilled professionals,

FIGURE 1 Mauritius / Real GDP growth and sectoral
contributions to real GDP growth

FIGURE 2 Mauritius / Actual and projected poverty rates
and real GDP per capita

Percent
12

Poverty rate (%)

Real GDP per capita (constant LCU)

25500000
450000820400000
350000415300000

0250000
10-4150000Agriculture
Industry
Services
Gross value added at basic prices-8-122000005100000
50000

00
2012-16

2014

2016

2018

2020

Lower middle-income pov. rate

2019

2020

2021

2022

2023e

2024f

2025f

2026f

Real GDP pc

Source: World Bank estimates.

Source: World Bank. Notes: see Table 2.

MPO

1

Apr 24

2022

2024

2026

Upper middle-income pov. ratethe government has relaxed rules forhiring foreign workers.
Lower commodity prices, higher agriculture and fisheries exports, a higher net surplus in the service, and net income flowfrom abroad improved the external position. Along with the net direct investment
flow, these developments helped maintainadequate levels of gross official international reserves, with an import coverage of11 months as of December 2023.
Headline inflation fell from 11.8 percent
in January 2023 to 5.2 percent in January2024, primarily because of lower importedprices. The import price index declined by
5.5 percent in 2023Q3 compared with thesame period in 2022 and the Bank of Mauritius (BOM) intervened in the FX market
to contain the rupee’s depreciation. However, the monetary policy stance is generally accommodative and underpinned by apolicy rate that has been unchanged since
December 2022 and added by domestic investments of the Mauritius Investment
Corporation (MIC), a sovereign wealthfund of the BOM.
Current government expenditures increased by 12.6 percent in the first halfof FY23/24 (H1), driven by higher interest payments, subsidies, and socialspending. Revenue increased by 11 percent, driven by corporate income tax andVAT revenues. As a result, the gross operating deficit in H1 widened to 3.6 percentof GDP from 3.2 percent during the same
period in 2022. Financing needs were covered by domestic and external borrowing
as the new BOM Act prohibits direct transfers to the budget. Public debt decreased
from 91 percent of GDP in 2020-21 to an
estimated 80 percent in 2023, driven bystrong GDP growth and the transfer of Air
Mauritius debt to the MIC.

OutlookReal GDP growth is expected to moderate
to 4.7 percent in 2024, reflecting the end of
the post-pandemic recovery and levelingoff in international travels. Public investments in infrastructure, residential constructions, and tourism are expected to drive growth this year. Average inflation isprojected between 4.7 and 5.2 percent in
the medium term, driven by stable commodity prices and a cooling economy.
Poverty is projected to fall to about sevenpercent in 2026.
Lower commodity prices, steady tourist
arrivals, and earnings repatriation are likely to keep the current account deficit below
6 percent of GDP until 2025, lower thanTABLE 2 Mauritius / Macro poverty outlook indicators

Real GDP growth, at constant market prices
Private consumption
Government consumption
Gross fixed capital investment
Exports, goods and servicesImports, goods and services(annual percent change unless indicated otherwise)

aReal GDP growth, at constant factor prices
Agriculture
Industry
Services
Inflation (consumer price index)
Current account balance (% of GDP)Net foreign direct investment inflow (% of GDP)
Fiscal balance (% of GDP)
Revenues (% of GDP)the 11 percent recorded between 2020 and2022. High foreign exchange demand forimports could put additional pressure on
international reserves, which are projected
to decline to eight months of import coverage over the medium term as the BOM
is expected to continue to intervene in theforeign exchange market.
Higher universal pension spending andspending to mitigate the impact of Cyclone
Belal and the dengue outbreak are expected to contribute to a widening in the primary deficit to 3.3 percent of GDP in FY23/
24 (from 2 percent in FY22/23) and further
to 3.6 percent in FY24/25. Tax revenue collection is expected to increase moderately
over the medium term along with moderating GDP growth. Public debt is expected
to remain at about 80 percent of GDP overthe medium term, but a gradual fiscal consolidation, including a pension reform, isneeded to stabilize it.
Risks to the outlook are mostly to thedownside. Higher global freight costs
and weather shocks from an intense cyclone season pose a risk for inflation. The
softening of global economic growth also
represents a downside risk for merchandise exports and tourist arrivals. On theupside, higher social spending and sustained direct investment flows may further
support growth.

bbDebt (% of GDP)b
Primary balance (% of GDP)c,dLower middle-income poverty rate ($3.65 in 2017 PPP)c,dUpper middle-income poverty rate ($6.85 in 2017 PPP)
GHG emissions growth (mtCO2e)
Energy related GHG emissions (% of total)

2021
3.4
3.0
-2.2
14.0
11.5
7.3

2022
8.9
3.3
6.4
7.8
40.2
10.2

2023e
6.8
2.0
-1.1
9.9
1.7
7.6

2024f
4.7
2.6
1.2
14.4
1.6
1.2

2025f
4.0
2.5
-0.4
10.3
1.6
0.7

2026f
3.3
1.7
1.8
8.1
1.5
0.7

4.1
7.3
10.9
2.3

9.4
5.5
6.8
10.3

6.8
0.8
2.6
8.2

4.7
1.5
2.1
5.4

4.0
1.5
2.1
4.5

3.4
1.5
2.1
3.7

4.0

10.8

7.1

5.2

4.7

4.2

-11.9
21.1

-8.6
-8.2

-4.8
-3.2

-3.8-4.6

-4.4
-2.2

-4.9
-2.9

-10.6
23.3
91.9
-6.9

-5.1
25.0
85.9
-2.5

-5.8
22.8
80.9
-2.9

-6.5
24.5
80.6
-3.2

-5.4
24.8
81.6
-1.9

-5.2
25.1
81.5
-1.8

2.1
15.3

1.7
12.7

1.3
10.5

1.1
9.2

0.9
8.1

0.7
7.4

7.4
60.7

6.9
62.2

3.3
62.3

2.5
62.2

2.3
62.1

2.3
62.0

Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD.
Notes: e = estimate, f = forecast.
a/ Historical demand-side data is being revised due to a consistency problem.
b/ Fiscal balances are reported in fiscal years (July 1st - June30th).
c/ Calculations based on 2017-HBS. Actual data: 2017. Nowcast: 2018-2023. Forecasts are from 2024 to 2026.
d/ Projection using neutral distribution (2017) with pass-through = 0.87 (Med (0.87)) based on GDP per capita in constant LCU.
MPO2Apr 24