January 06, 2013

Challenges of the Mauritian Economy in 2013

2013 will be a year of many challenges for the Mauritian economy will continue to suffer the vagaries of the euro crisis.

Faced with lackluster growth below 4%, inflation shows signs of recovery and an unemployment rate of 8%, the captains of industry and Mauritian authorities will not have the easy part. Diversification outside of Europe, especially in Africa is an option to perk up the economy.

1. Inflation: the comeback

It is not a secret! Inflation occupy the forefront of the economic scene this year. To the Governor of the Bank of Mauritius and some economists, inflation will resume the bull by the horns due to several factors: the payment of PRB in January, the depreciation of the rupee, the cascade of increases in food prices, threat of rising prices of gasoline and diesel price increases in the last Budget (prices of cigarettes, soft drinks and alcoholic syrup ...).

In its latest survey on inflation, the Bank of Mauritius indicates that the majority of traders expect an inflation rate of between 4.5% and 6.5% in June 2013. Even the Minister of Finance is forecasting inflation of 6% for 2013. There is no doubt that many members of the Monetary Policy Committee which will meet on March 4 will look for a higher interest rate, even alienating exporters fervent advocates of a rate cut . Remains whether all members have the heart to price stability. Because that says inflation, said erosion of purchasing power.

2. Growth trampling

Operators, members of the private sector, economic observers ... All are on the same wavelength. Mauritius has a growth potential of 5% to 6%. But the reality is quite different. Affected by the economic crisis, the country's growth barely surpass the 4% according to data from Statistics Mauritius: 3.5% in 2011, 3.3% in 2012 and 3.7% in 2013.

The Minister of Finance is more optimistic and expects a rate of 4%. One of the challenges in 2013 will be to relaunch growth. Because it is the growth that can boost investment and create jobs. If traditional sectors will not fire up growth, the financial sector or the ICT sector can contribute. Another solution, according to experts, is to implement new economic pillars and poles of development. But then again, observers expressed doubts. So far, the creation of an industry Oceanographic and Medical Hub is expected.

3. The hard struggle against unemployment

The unemployment rate is rising. It rises 8% in 2012 against 7.9% in 2011, according to Statistics Mauritius. There are to date 47 100 unemployed in the country, 20,500 were aged under 25 years. A number that is expected to rise in 2013 even though the Mauritius Employers Federation does not provide "mass layoffs." If the 2013 budget includes a battery of measures to make the unemployed "employable", the battle is not yet won. Especially in this time of crisis, companies are reluctant to hire people and create new jobs.

4. Banking on Africa

Diversification of our markets will watchword this year. Our traditional European markets are in trouble, operators and authorities postpone their hope on Africa - even if they do not count neglecting existing markets - and are more determined than ever to become the bridge between Africa and Asia . But the task is far from easy especially as the problems of doing business in African countries are not lacking: access to finance, corruption, lack of infrastructure, government bureaucracy ...

If the Board of Investment and Enterprise Mauritius are making efforts to target Africa, while not based, however, that these two organizations. The state has a role to play in terms of opening of air access in Africa and Asia, these two large markets for both tourism and textiles. Also some large companies, the banking sector in Mauritius also seems good spinning cotton on the Dark Continent. However, other operators including offshore call are also making efforts to attract potential customers Africans. Because Africa will not come without effort and Mauritius will.



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