Mauritius budget measures promise a dynamic boost to the economy

The Bank of Mauritius, the central bank of the Republic of Mauritius, is optimistic about the positive impact of the budget measures announced on June 2 on the Mauritian economy. According to the Governor of the Bank of Mauritius, Harvesh Seegolam, these measures should boost consumption, investment, and exports while supporting Mauritius’s competitiveness.

Despite a challenging global economic environment, encouraging signs indicate an improvement in international economic activity. The combination of tightening monetary policy by central banks worldwide and the decline in transportation costs and commodity prices have contributed to lower inflation in many countries, thus promoting economic recovery. The Mauritian economy has already shown signs of recovery in 2022, with 8.7 % growth. Key sectors such as tourism, services, and manufacturing have been the drivers of this recovery. Additionally, the labor market has improved, with a downward trajectory of unemployment. Real estate has also benefited from significant inflows of foreign direct investment.

The Bank of Mauritius expects this economic recovery momentum to continue into 2023 due to the recently announced budget measures. These measures aim to stimulate consumption, investment, and exports while enhancing Mauritius’s competitiveness internationally. Regarding inflation, the Bank of Mauritius predicts a downward trend, with an estimate of about 6.8 % in 2023. For the following year, inflation is expected to be between 2 and 5%. These forecasts are encouraging and indicate control of inflation, which promotes economic stability. The Monetary Policy Committee examined various options, including a potential increase in the key interest rate. However, when analyzing the forecasts regarding inflation and growth, the committee concluded that an additional increase in the key interest rate was not justified at this stage. Therefore, the key interest rate will be maintained at 4.50 %.

The budget measures put in place by the government should stimulate household consumption and encourage local investments and attract flows of foreign direct investments. Thus, Mauritius positions itself to continue attracting investments and fostering strong economic development. The Bank of Mauritius is optimistic about the continued economic recovery in 2023 and estimates that these measures will support the country’s competitiveness, contributing to sustainable economic growth.

Mias Sylvia