Mauritius

Executive Summary

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 2019, Mauritius’ GDP was 14 billion USD and its gross national income per capita surpassed 12,900 USD.  In July 2020, the World Bank classified Mauritius as a high-income country based on 2019 data, but most analysts forecasted that Mauritius would likely revert below high-income status in 2021 due to the effects of the Covid-19 pandemic. 

The pandemic severely damaged the economy.  While the government was relatively successful in mitigating the health impact – only 10 people died from the virus in 2020 – tourism, which contributed around 20 percent to the economy, disappeared.  Export demand, specifically textile manufacturing, also declined.  The IMF estimated that GDP growth contracted 14.2 percent in 2020, the country’s worst economic performance in four decades.  Statistics Mauritius estimated significant contractions in the 2020 growth rate in sectors such as accommodation and food services (-67.4 percent), construction (-25.4 percent), manufacturing (-20.1 percent), and commerce (-12 percent).  The IMF forecasted that the country’s economy would rebound with a 9.9 percent growth in 2021, but a second lockdown that began in March 2021 could change that estimate.

According to the World Bank’s Ease of Doing Business Index 2020, Mauritius ranked first in Africa and 13th worldwide out of 190 countries.  Unemployment was estimated at 6.7 percent at the end of 2019, while inflation forecasted for 2020 was 2.8 percent.

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 services-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 2020, however, officials focused on keeping sectors afloat whose customers disappeared due to the pandemic.

Government policy in Mauritius is pro-trade and investment.  The GoM has signed Double Taxation Avoidance Agreements with 46 countries and maintains a legal and regulatory framework that keeps Mauritius highly ranked on “Ease of Doing Business” and good governance indices.  In recent years, Mauritius has been especially intent on attracting 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 in February 2021, and it took effect in April 2021.  The Mauritian government 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.  A commercial dispute between a foreign investor and a parastatal partner that has turned into a criminal investigation, for instance, has raised questions of governmental impartiality.