2014-02-19 08:20:04 - Mauritius Business Forecast Report Q3 2013 - a new country guide report on companiesandmarkets.com
We expect economic activity in Mauritius to gradually pick up over the coming quarters as improving (albeit still challenging) external conditions precipitate a tentative recovery in key export-oriented industries. Improvements in the traditional growth pillars of the economy will be accompanied by robust growth in higher value added industries, particularly financial services. We are forecasting real GDP growth of 3.8% and 4.2% in 2013 and 2014 respectively.
The island nation will sustain a significant, but narrowing, current account shortfall over the medium term as robust demand for imported goods keeps the trade balance deep in the red. That said, we expect this deficit to be adequately financed by capital inflows, notably foreign direct investment, with risks to external stability remaining low
under our current assumptions.
While we hold to our view that Prime Minister Navin Ramgoolam and his ruling Mauritian Labour Party-led (MLP) coalition will maintain their slender grip on power over the near term, but nonetheless remain under pressure from an increasingly vociferous opposition. Issues such as the expected debate on electoral reform in July and Mauritius´s ongoing renegotiations with India over the Double Taxation Avoidance Agreement are likely to take on added significance.
Major Forecast Changes
We have made downward adjustments to our real GDP growth forecasts for 2013 and 2014, to 3.8% and 4.2% respectively (from 4.0% and 4.9% previously) on account of a sharper than expected slowdown in gross fixed capital formation.
We have upwardly adjusted our projections for Mauritius´s current account deficit to 10.2% of GDP in 2013 and 8.6% in 2014 (from 13.4% and 12.2% previously). This was due mainly to a sharper than expected slowdown in capital goods imports and the impact of notable upward statistical revisions to financial services export data.
Key Risks To Outlook
While we expect a fledgling recovery to take hold in the eurozone over the course of 2013, a significant deterioration in conditions would pose notable risks to our outlook given Mauritius´s exposure to the region.
The government´s paper thin parliamentary majority will continue to be a source of political uncertainty and parliamentary gridlock over the short. Risks of parliamentary elections being called before the scheduled date of 2015 therefore remain elevated. The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.
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