for the rest of the year, the shortfall could rise to around rs50 billion. this represents a significant drop in fx inflows from the tourism sector. 22. latest data from the world tourism organization shows that international tourism was down by 22 per cent in the first quarter of 2020 and could decline by a maximum of 80 per cent in 2020. the world tourism organization has projected that nearly 1. 1 billion individuals will not travel in 2020. 23. statistics mauritius has estimated an economic contraction of 2. 0 per cent in the first quarter of 2020. the fall in real output occurred primarily in the accommodation and food service sector, the manufacturing sector, and the distributive trade sector. real output is projected to decline substantially in the second quarter of 2020. 24. domestic inflation has remained low and stable. inflation in june 2020 was 1. 8 per cent. 25. the economic fallout is adversely altering labour market dynamics. foreign exchange market 26. since the onset of the crisis, activity on the foreign exchange ( fx ) market has been low. fx turnover fell by around 53 per cent in the second quarter of 2020, relative to the corresponding period of 2019. 2 / 5 bis central bankers'speeches 27. the bank has been consistently supplying fx to the market. since 18 march 2020, taking into account swap transactions, the fx lines of credit to banks and fx interventions, the bank has supplied an aggregate of usd656 million ( or equivalent to around rs26 billion ) to the banking sector. the bank has sold usd242 million directly to banks through intervention. over and above, the bank has supplied the state trading corporation a total of usd67 million. the bank stands ready to intervene and supply fx to the market as and when required. 28. exchange rate movements in the past few months have reflected domestic macroeconomic fundamentals as well as international factors. the bank is committed to ensure orderly conditions on the fx market and support the floating exchange rate regime. balance of payments and fx reserves 29. the current account deficit worsened in the first quarter of 2020, reaching 4. 2 per cent of gdp from 3. 2 per cent in the first quarter of 2019. the country recorded an overall balance of payments deficit of rs5. 9 billion in in the first quarter of 2020 as against a surplus of rs7. 4 billion in the first quarter of 2019. for 2020, an overall balance of payments deficit of rs40 billion is projected, primarily due to a drop

the pandemic. after significant tightening of financial conditions, these policies helped restore confidence in financial markets across the globe. 13. major international organisations have further slashed their growth forecasts to historical lows : a. in its june 2020 world economic outlook ( w eo ) update, the imf has downgraded its global growth projection to – 4. 9 per cent for 2020, from – 3. 0 per cent in april. advanced economies are forecast to contract by 8. 8 per cent in 2020, with the euro area shrinking 1 / 5 bis central bankers'speeches by 10. 2 per cent. emerging market and developing economies are projected to contract by 3. 0 per cent. b. the world bank has lowered its global growth projection for 2020 to – 5. 2 per cent. c. the oecd ’ s forecast shows an economic contraction of 7. 6 per cent in 2020. 14. substantial downside risks still prevail given the resurgence of covid - 19 infections in several parts of the world. 15. brent oil prices are currently at around usd43 a barrel, well below their 2019 prices. commodity prices, excluding precious metals, remain weak reflecting the demand shock. 16. inflation has remained below central banks ’ targets. the imf projects inflation in advanced economies at 0. 3 per cent in 2020, from 1. 4 per cent in 2019. for emerging market and developing economies, inflation is forecast at 4. 4 per cent, from 5. 1 per cent in 2019. 17. both fiscal and monetary policy measures will continue to accompany the global economic recovery process. in its june 2020 w eo update, the imf has assumed that major central banks will maintain an accommodative monetary policy stance up to the end of 2021. domestic economic developments 18. i will now turn to domestic developments. 19. the mauritian economy is already being buffeted by the pandemic. moreover, household consumption and private investment are expected to remain subdued in 2020. 20. the tourism sector has been the hardest hit, together with the manufacturing and trade sectors. the timing of the resumption of air travel and cautious behaviour by travellers could further weigh on the performance of the sector. statistics mauritius estimates tourist arrivals to drop by around 70 per cent in 2020 compared to 2019. 21. on average, tourism revenue in the first half of 2020 would fall short of 2019 receipts by around rs18 billion. in the event the national borders remain closed