Mauritius revised its growth prospects downwards and there are fears that private investment will be scaled back amid threats to global growth.
Preliminary indications point to an annual average growth rate for the 2012 to 2014 period of about 4 percent instead of the gradual recovery to 5 percent, Financial Secretary Ali Mansoor said in a statement published on the finance ministry’s website.
“Although the Mauritian economy has shown some degree of resilience in the recent past, the economy is not yet on a sustained recovery path,” Mansoor said in a circular dated Aug. 3 sent to ministries.
The Mauritian economy is expected to grow 4.6 percent this year compared with 4.4 percent in 2010, led by tourism and textiles exports, Bank of Mauritius Governor Rundheersing Bheenick said on June 14. The Indian Ocean Island nation, with a population of 1.3 million people, has Europe as its main trading partner. About 41 percent of foreign currency revenue is in euros, with 67 percent of its import bills denominated in dollars, according to central bank data.
Domestic private investment “continues to be depressed” the finance secretary said, and foreign direct investment “may begin to decline significantly.” Foreign investment dropped 70 percent to 1.4 billion rupees, for the quarter through March, the Bank of Mauritius said on June 10.
“Growth prospects are now below previous projections and the current accounts and balance of payments face more pressure,” Mansoor said.
The island’s current account deficit narrowed to 3.6 billion rupees in the first quarter, or 5 percent of gross domestic product, the central bank said on June 10. The trade deficit widened almost 16 percent to 17 billion rupees ($605 million) during the quarter through March, and is forecasted to reach 83 billion rupees in 2011, the Central Statistics Office said on May 31.