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The Mauritian Economy: 2012 Outlook
Executive Summary
Bracing for another storm
While the Mauritian economy has been resilient thus far, the flip-flops in select Government policies have sent mixed signals to both the private sector and potential investors. Nonetheless, the economy grew at an estimated 4% in 2011 driven by a resurgent textile industry, and a strong performance by the financial sector. A year ago we had believed that the worst was behind; however, the issues surrounding the unsustainable levels of sovereign debt in Europe have now induced a localised mild recession. This will hurt demand and coupled with a weak EUR, we expect stagnation across a few sectors. Consequently, AXYS continues to adopt a conservative stance and projects a GDP growth rate of 3.4%. Our expectations are below that Statistics Mauritius’ 4% and the IMF’s 3.7% respective forecasts.

2012 in Perspective
While export manufacturing did recover in 2011, we expect a slow down for receipts from Europe-facing exports, although US-facing exports should show signs of improvement. The absence of major projects coupled with government-driven PSIP delays will lead to a lethargic year for construction. On the Real-Estate front, we expect rentals to face downwards pressures in the coming years given the completion of several new malls, business parks, and residences. On the plus side, we believe the financial sector will become Mauritius’ primary growth engine during 2012. Tourism will continue to struggle due to excess room capacity on the island; while the Sugar industry could see improved yields at adequate rates; although drought conditions and a weak EUR represent a threat.

The current account deficit should remain under 9% of GDP increasing slightly due to lower export revenue; however with inflation set to drop under 5%, we would expect cuts in the Key Repo Rate during the upcoming months to alleviate the interest burden on leveraged enterprises. AXYS expects unemployment – which remains a non-factor – to be contained at about 8%.

Country Information
Appellation:
Independence/Rep.:
Government:
President:
Prime Minister:
Suffrage:
Off. & Biz. Language:

Republic of Mauritius
March 12, 1968/1992
Westminster Dem.
Sir Jugnauth, A.
Dr Ramgoolam, N.
Universal, >18yrs
English & French

Geography
Area:
Excl. economic zone:
Capital:
Location:
Time Zone:
Climate:
Tel. country code:
Intnet country code:

2

2,040 km
2
1.9M km
Port-Louis
20° 10' S; 57° 30' E
GMT +4 hrs
Sub-tropical
230
.mu

Demographics
Population:
Popn growth rate:
Median age:
Life expectancy:
Workforce:
Unemployment:
Literacy:
Poverty:

1,286,100
0.70%
32.7 yrs
74.5 yrs
606,500
7.9%
88% (2008)
8% (2007)

Currency
The Water Situation
Surprisingly, authorities were able to keep water flowing thanks to draconian rationing throughout 2011. Since 50% of the local water supply is lost in distribution, it would be fair to reason that rationing water results in substantial savings. We are of the opinion that the policy should remain until pipelines are re-done.

AXYS

CSO

2009

2010

2011

2012E

2012F

GDP Growth @ Mkt

3.0%

4.1%

4.1%

3.4%

4.0%

Manufacturing

2.1%

2.1%

3.5%

1.6%

1.5%

-0.2%

0.0%

8.2%

1.0%

0.0%

3.8%

4.3%

5.5%

4.8%

4.7%

Textiles
Financial Intermediation
Banking

3.0%

3.9%

5.9%

4.8%

5.9%

6.2%

6.3%

2.0%



Construction

6.2%

4.3%

-1.8%

0.3%

3.5%

Hotels & Restaurants

-5.9%

6.0%

4.0%

0.3%

3.0%

Sugar

15.0%

-4.0%

1.6%

1.1%

4.4%

Mauritian Rupee
Rs / MUR
Rs 29.40 per USD
Rs 40.95 per EUR

Economy (2011)
GDP growth rate:
GDP at mkt price:
GDP per capita:
GDP ppp:
GDP ppp per capita:
Budget deficit:
Public debt:
Current A/C deficit:
Headline Inflation:
Net intl reserves:

4.1%
Rs 324.8bn
Rs 252,500
th
$ 18.1bn (129 )
nd
$ 14,000 (82 )
3.8%...
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