Mauritius is an island nation with a population of 1.3 million people. The Government of Mauritius (GoM) claims an Exclusive Economic Zone (EEZ) of approximately 2.3 million square kilometers, but its undisputed EEZ amounts to approximately 1.3 million square kilometers, in addition to jointly managing about 388,000 square kilometers of continental shelf with Seychelles. Mauritius has maintained a stable and competitive economy. Real GDP grew at an average of 4.7 percent from 1968 to 2017, enabling the country to achieve middle-income status in less than 50 years. In 2022, Mauritius’ GDP was $12.5 billion and its gross national income per capita amounted to $9.921. In July 2020, the World Bank classified Mauritius as a high-income country based on 2019 data, but Mauritius reverted to upper-middle income status in 2021 due to the effects of the COVID-19 pandemic, which severely damaged the economy.
Mauritius has been gradually recovering from the pandemic. Despite the negative impacts of the COVID-19 Omicron variant wave and Russia’s war in Ukraine, GDP growth accelerated from 3.5 percent in 2021 to 8.3 percent in 2022, mainly supported by recovery of the tourism sector, according to the World Bank. Statistics Mauritius reports the tourism sector to have experienced a growth rate of 200 percent since the opening of borders in October 2021. There was a strong rebound in both exports of goods and services linked to increased tourism activities. The IMF forecasted that the economy would grow 6.1 percent in 2022. Unemployment was estimated at 7.8 percent at the end of 2022, while inflation for 2022 was 11.0 percent compared to 4.0 percent in 2021.
One of the poorest countries in Africa at independence in 1968, Mauritius has become one of the continent’s wealthiest. It successfully diversified its economy away from sugarcane monoculture to a manufacturing and service-based economy driven by export-oriented manufacturing (mainly textiles), tourism, financial and business services, information and communication technology, seafood processing, real estate, and education/training. Before COVID-19, authorities planned to stimulate economic growth in five areas: serving as a gateway for investment into Africa; increasing the use of renewable energy; developing smart cities; growing the blue economy; and modernizing infrastructure, especially public transportation, the port, and the airport.
In November 2022 at the Conference of Parties 27 (COP 27), the GoM pledged to reduce its greenhouse gas emissions to 40 percent by 2030 and supported the creation of a funding mechanism to address losses and damages from climate change. The GoM initially announced its emissions reduction target in November 2021 at COP 26 through the presentation of its updated Nationally Determined Contributions (NDC). To achieve this target, the government plans to undertake major reforms in its energy, transport, waste, refrigeration and air-conditioning, agriculture, and conservation sectors. The government aims to produce 60 percent of the country’s energy from green sources by 2030, to phase out the total use of coal before 2030, and to increase energy efficiency by 10 percent based on 2019 figures. As part of the national strategy to modernize the public transport system, the light rail network that launched in 2019 is expected to be extended. The government was also working to diversify 70 percent of waste from the landfill by 2030 through the implementation of composting plants, sorting units, biogas plants and waste-to-energy plants.
In 2022, however, Mauritius faced challenges in addressing its economic recovery post pandemic. The World Bank reported a rise in inflation from 4 percent in 2021 to 10.8 percent in 2022, the highest Mauritius has known in a decade, driven by global supply bottlenecks, higher fuel and food prices, and freight costs due to the Russia war in Ukraine. To manage the inflationary pressures, the Bank of Mauritius (BoM) increased the key repo rate six times between March and December 2022 to 4.5 percent. The IMF main policy recommendations for 2022 were to work on reducing public debt, which was considered as relatively high at a projected 92.4 percent of GDP, adopt a restrictive monetary policy consistent with the macroeconomic outlook and domestic inflation expectations, and invest in further digitalizing the economy and climate change adaptation and mitigation measures.
Government policy in Mauritius is pro-trade and investment. The GoM has signed Double Taxation Avoidance Agreements with 45 countries and maintains a well-regarded legal and regulatory framework. Mauritius has been eager to attract foreign direct investment from China and India, as well as courting more traditional markets like the United Kingdom, France, and the United States. The China-Mauritius free-trade agreement went into effect on January 1, 2021. Mauritius also signed a preferential trade agreement with India, which went into effect in April 2021. The GoM promotes Mauritius as a safe, secure place to do business due to its favorable investment climate and tradition as a stable democracy. Corruption in Mauritius is low by regional standards, but recent political and economic corruption scandals illustrated there was room for improvement in terms of transparency and accountability. For instance, a long-running commercial dispute between a U.S. investor and a parastatal partner that turned into a criminal investigation has raised questions of governmental impartiality, though charges were dropped in January 2023 and the investor left the country. Nevertheless, the investor has noted the government continues to pursue legal action against him.
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