Mauritius business confidence plunges in second quarter on weak demand
There has been a decline in consumption growth in Mauritius from 6.5 percent on average over the first four-year period from 2004-2008 to 2.5 percent on an average over the subsequent four-year period from 2009-2013. (Image: Veooz)
Mauritius’ future business outlook is somber, with the Business Confidence Index for the period starting May 26 to June 16, 2014 showing a dip in confidence to 79.6 points, against 85.3 in the previous quarter.
The Mauritius Chambers of Commerce and Industry (MCCI) released the business confidence index for the last quarter on Monday July 07, 2014.
The survey, which was conducted among a sample of company leaders, indicates that there could be an economic downturn over the short to medium term horizon.
“More than two-thirds of captains of industry surveyed said that they have noted a drop in demand during the current quarter,” said MCCI economist Renganaden Padayachy at a news conference.
“The reason behind this economic regression is that there has been a decline in consumption growth in Mauritius from 6.5 percent on average over the first four-year period from 2004-2008 to 2.5 percent on an average over the subsequent four-year period from 2009-2013,” he said.
It may be noted that the latter 4-year period coincides with the global financial recession which started in September 2008 and whose impact was felt all the way till the close of 2013.
“Consumption behaviour is generally adversely impacted in times of economic uncertainty as consumers tend to be more cautious,” he added.
Moreover, aggressive competition on the local market had been another factor which has affected the performance of companies on the island.
Indeed, this has not only drastically decreased their profit margin in periods of low demand, but they also found themselves faced with unfair competition from the informal sector.
In addition, last week, Statistics Mauritius trimmed its economic growth forecast for the year to 3.5% from an earlier estimate of 3.7%, where it cited anticipated lower growth in the textile industry and the Information and Communication Technology (ICT) sectors.
Furthermore, the economy expanded by a mere 2.4% in the first quarter of this year against 3.8 percent in the corresponding year-ago period.
Finally, although this is a period of low demand consequent on slack activity, entrepreneurs expressed positive sentiments on the future growth of their companies.