Mauritius at risk from abrupt global slowdown: IMF

PORT LOUIS – Economic growth in Mauritius remains at significant risk from a sharp global slowdown with tourism, textiles and real estate the most exposed sectors, according to the International Monetary Fund.

The Indian Ocean island is one of Africa’s most stable, prosperous countries, but the worsening global outlook has prompted the government to trim its 2009 growth forecast to four per cent and introduce a stimulus package.
‘While economic vulnerabilities have been reduced in recent years, the downside risks to the Mauritius economy from the global recession will pose challenges for key export sectors,’ the IMF said in a report dated January 5.
‘An abrupt slowdown in global economic growth and a sustained reduction in risk appetite could significantly impact the Mauritian economy. The main risks are from much lower demand for tourism, textiles, and real estate development,’ it said.
Annual growth in Mauritius leapt from 2,3 per cent in 2005 to over five per cent following a raft of reforms in 2006 to modernise the sugar and textile sectors and boost investment in tourism, telecommunications and financial services.
The IMF also said it expected growth in Mauritius to slow to four per cent this year from the 5,2 per cent pace predicted for 2008. Some analysts, however, say four per cent is optimistic.
Last month the government unveiled a US$330 million stimulus package to boost the economy by 1 to 1,5 per cent. The IMF said it needed to be ‘measured, targeted to need and temporary’ so as not to jeopardise hard-won gains in fiscal sustainability.
Mauritius reduced its overall deficit to 3,4 per cent of gross domestic product in 2007/08 from 5,4 per cent in 2005/06.
The IMF said while the external current account deficit had risen to nine per cent of GDP in 2007/08 from 7,7 per cent in 2006/07, it was unlikely to deteriorate further.
‘The current account deficit is not expected to change greatly in 2008/09 as lower demand for tourism, textiles, and offshore investment services are offset by lower imports as FDI weakens and on lower commodity prices,’ the IMF said. – Nampa-Reuters