Mauritius emerges as resilient diversified economy despite global challenges
Mauritius has successfully diversified its monoculture economy into manufacturing and services, with a vibrant export sector focused on textiles, apparel, and jewellery as well as a growing, modern, and well-regulated offshore financial sector. (Image: http://i2.cdn.turner.com)
Mauritius brings to mind visions of tall slender palms quietly dancing in the trade winds, long sandy beaches, and waves from a cobalt blue ocean washing gently upon the shore. While all this is true, recently this nation is also being recognised for its competitive and export-driven economy, emergence of financial services and foreign direct investment initiatives.
Emerging from the British colonial period in 1968 with a monoculture economy based on sugar production, Mauritius has since successfully diversified its economy into manufacturing and services, with a vibrant export sector focused on textiles, apparel, and jewellery as well as a growing, modern, and well-regulated offshore financial sector.
The economic transformation in Mauritius has translated into improved living standards for its citizens. Life expectancy has improved, infant mortality has declined and the country has better quality infrastructure.
Recently, the government of Mauritius has focused its attention on opportunities in three areas: serving as a platform for investment into Africa, moving the country towards renewable sources of energy, and developing economic activity related to the country’s vast oceanic resources.
Mauritius actively seeks investments and seeks to service investment in the region, having signed more than forty Double Taxation Avoidance Agreements and maintaining a legal and regulatory framework that keeps Mauritius highly-ranked on “ease of doing business” and good governance indices.
A stable macroeconomic environment, prudent policy decisions, and openness to competition have facilitated economic development in Mauritius. Adoption of open-market policies has been accompanied by the development of growing financial and tourism sectors that have helped to supplant traditional subsistence agriculture. The rule of law has been enforced effectively within a framework of transparency and accountability, although corruption remains a concern.
The African Development Bank sees Mauritius as a sound suitable macroeconomic management during global economic crisis. Measures and reforms initiated by the Mauritian Government made the economy resilient, resistant to outer influence. In 2013, Mauritius succeeded in going ahead of South Africa to become one of the most competitive economies in Sub Saharan Africa.
Despite emerging governance, state institutions and corruptions constrains, Mauritius has successfully build business friendly and competitive economy image for investors. Having the region’s best business environment and most competitive economy, Mauritius is well placed to build on the progress it has made by participating in the global industry and services value chains.”
Macroeconomic indicators and Mauritian Economy Strengths and Weakness
Source: The Economist
Moreover, according to the African Economic Outlook, growth in Mauritius has slowed from 3.4% in 2012 to 3.3% in 2013 on the back of weak external demand and muted domestic investment. Forecasts for 2014 and 2015 show a rebound with the growth rate rising to 3.5% and 4.1% respectively.
As for the World Bank however, the global financial institution is now estimating 2015 GDP growth rate of 4.1%. Over the last couple of decades or so, there has been a push to diversify the economy, with the introduction of textile manufacturing, tourism sector and financial services, which have grown exponentially and attracted a large amount of foreign direct investment.
Moreover, according to the study Mauritius Country Analysis 2013-2018: An Evaluation of Political, Social, Economic, and Business Risk, conducted by Lucintel, a leading global management consulting and market research firm, Mauritius is the 126th largest country in the world by nominal GDP.
The study focuses on the country’s economy being expected to grow with a moderate CAGR to reach $15.7 billion by 2018. The country has been lauded for its strong economic growth, high foreign direct investment (FDI) inflows, low debt levels and prudent fiscal management. Besides, the sound macro policy framework in recent years and the geostrategic location of the country adds an edge to its economy.