Mauritius slashes GDP growth forecast to 3.5% for 2014
In the first quarter of 2014, the GDP growth rate is estimated at 2.4% with the financial sector contributing 0.6 percentage points. (Image: Port Strategy)
The island’s forecast GDP growth rate for 2014 has been revised downward by 0.2 percentage points to 3.5% from the forecast of 3.7% issued in March 2014, based on a weak first quarter performance and supplemented by information gathered on key sectors of the economy.
According to Statistics Mauritius, the revision in the island’s GDP is based on information from the agriculture, manufacturing, construction, accommodation and food service activities, ICT and financial services sectors.
In 2014, the primary sector comprising agriculture, fishing and forestry activities, is anticipated to expand by 7.4%, higher than the 0.4% growth in 2013. Sugar production is expected to be around 451,000 tonnes, expected to result in a growth of 1.9% against -1.9% in 2013. Also, other agriculture is set to expand by 10.0% mainly due to expected increase in fishing activities, compared to a lowly growth of 1.7% in 2013.
On the contrary, the manufacturing sector will encounter slower growth of 1.7%, after a healthy 4.4% growth in 2013, with sugar milling to improve by 3.8% after a contraction of -1.0% in 2013 due to a local sugar production of 415,000 tonnes and the refining of 50,000 tonnes of imported raw sugar.
In addition, food processing is set to expand by 3.0% considering the increase in fishing activities compared to the negative growth of -0.3% in 2013, textile manufacturing to grow at a rate of 1.5%, based on exports data for the first quarter of 2014 compared to the 2.6% growth observed in 2013, and other manufacturing to decline after the double digit growth of 12.7% in 2013.
The construction sector is expected to decline by -4.8% after the reduction of -9.4% in 2013, mainly explained by a drop in major private construction projects, while the ICT sector will grow by 6.5%, lower than the 6.9% in 2013.
The accommodation and food service activities, and financial sectors will grow by 3.5% and 5.3% respectively, with the former’s growth based on the 1,030,000 tourists who are anticipated to arrive on the island shores in 2014, buoyed by forecast tourist earnings at Rs 44.5 billion.
In the first quarter of 2014, the GDP growth rate is estimated at 2.4% with the financial sector contributing 0.6 percentage points, trade and repair activities as well as scientific and technical activities each contributing 0.4 percentage points, ICT and social work activities, each contributing 0.3 percentage points; and manufacturing, construction as well as accommodation and food service activities which registered a negative contribution of 0.5, 0.2 and 0.1 percentage points respectively, as the main contributors.
The final consumption expenditure of households grew by 1.6% in the first quarter of 2014 while the consumption expenditure of general government grew by 1.1%.
Exports and imports of goods and services did not improve during the first quarter of 2014 with a decline of 2.4% in exports while imports declined by 4.5%.
Overall, for 2014, imports of goods and services are forecast at Rs 256,086 million in 2014 compared to Rs 243,567 million in 2013, with a real growth of 3.6% compared to 6.0% in 2013.
Meanwhile, exports of goods and services would increase Rs 210,329 million in 2014 from Rs 198,893 million in 2013, representing a growth of 4.3% in real terms.
Coming to investment, it grew by 1.4% in the first quarter of 2014, lower than the growth of 1.9% registered for the fourth quarter of 2013. The growth of 1.4% was the combined result of a growth of 11.0% in machinery and equipment, partly offset by a decline of 3.2% in building and construction work.
For the full year, it is forecast to grow to Rs 80,745 million, or by 0.4% in real terms, after contracting by -3.3% in 2013. Exclusive of investment on aircraft and marine vessels, amounting to Rs 3,680 million, investment would fall by -0.8% in 2014, compared to a decline of -6.7% in 2013.
Building and construction work is expected to dip by -4.2% in 2014 after dipping by -10.2% in 2013 while the Machinery and equipment segment would continue to grow by 8.7% in 2014 mostly explained by expected investment in marine vessels compared to the growth of 11.7% in 2013.
Private sector investment is expected to decline further by -3.7% after a contraction of -2.8% in 2013 while public sector investment is forecast at Rs 21,620 million in 2014, representing a real increase by 13.7% after a dip of -4.9% in 2013. This positive growth would be mainly due to investment in Berth extension at Mauritius Container Terminal, additional investment in Bagatelle Dam and acquisition of a patrol vessel.
Accordingly, the share of private sector investment is expected to decrease to 73.2% from 76.4% in 2013 and that of the public sector, to increase to 26.8% from 23.6%.