The Bank of Mauritius (BoM), in its latest Monetary Policy Report in May, remarked that the Monetary Policy Committee (MPC) has kept the Key Rate unchanged at 4.50 per cent per annum amidst data hinting that GDP growth has slowed down in the first quarter of the year coupled with the IMF downward revision to growth outlook for the jurisdiction’s major trading partners may negatively impact domestic growth momentum for 2025, through the trade channel.
The revised downwards growth projections with the real GDP growth poised to be in the range of 3 percent to 3.5 percent are made in relation to initial estimates in the bracket of 3.5 percent to 4 percent, while headline inflation may slightly be higher than an earlier forecast of 3.5 percent made during the MPC meeting held in May this year. The rise in inflation is attributed to the tariff-induced imported price increases and the stickiness of services inflation due to wage increases, while it has been observed that it can be mitigated by declining commodity prices on account of lower global demand.
The report mentioned that since November 2024, the bank has implemented a slew of measures designed to eliminate distortions in the domestic foreign exchange markets prevailing for some time, that has helped to enhance market liquidity and alleviate pressures on the rupee exchange rate.
In terms of growth, the Central Bank, as referred by Statistics Mauritius in its March 2025 national accounts release, has revised downwards the GDP growth for 2024 to 4.7 percent as compared to initial estimates of 5.1 percent and again raised it to 4.9 percent in June this year. Under the growth segment, the Financial and insurance activities, ‘Information and communication’, and ‘Transportation and storage’ sectors clocked in growth ranging between 4.2 per cent and 5.2 per cent in 2025Q1, while higher activity was noted across the ‘Wholesale and retail trade sector at 3.1 percent.
A surplus in the primary income account, encompassing GBC flows, was noted, where it hit Rs 84.9 billion in 2024, as a result of persistent growth in the residents’ foreign assets and high global interest rates, where it arose almost equally from GBC and non-GBC transactions, accounting to Rs 41.5 billion and Rs 43.4 billion, respectively. The net income surplus of the non-GBC sector, attributed to net income earned by commercial banks and interest income earned on reserve assets, soared to Rs 16.5 billion in relation to Rs 11.5 billion a year ago.
On the other hand, the secondary income account, comprising taxes paid to foreign governments by GBCs and outward workers’ remittances, registered a lower deficit of Rs 37.9 billion in 2024. The outward workers’ remittances saw an upward trend to reach Rs 11.0 billion in 2024 in relation to Rs 4.9 billion in 2017, which reflects a sharp rise in foreign workers across different economic sectors, with India and Bangladesh emerging as the top recipient nations with 70 percent total outward remittances at Rs 4.4 billion and Rs 3.7 billion, respectively.
In recent years, outward remittances to Nepal saw a significant rise from Rs 86 million in 2022 to reach Rs 1.0 billion in 2024, making it the third recipient country for outward remittances, followed by France and Madagascar. In the same vein, the balance of payment surplus stood at Rs 50.6 billion in 2024 against a deficit of Rs 31.3 billion in 2023 with net inflows at Rs 46.4 billion in 2024 compared to Rs 28.9 billion in 2023, attributed to by net portfolio investment inflows on account of repatriation of banks’ foreign debt securities investments and increases in GBCs’ portfolio investment liabilities.
The monetary base grew by 7.1 per cent in April 2025 in relation to 3.1 percent in December 2024, in terms of year-on-year terms, where this expansion reflects to a large extent the buildup in deposits of commercial banks held at the Central Bank. It is pointed out that since August 2024, the Broad Money Liabilities (BML) growth was in double digits, from 12.7 per cent in December 2024 to 11.3 per cent in April 2025, as a result of lower growth in deposits of the household and Other Financial Corporation sectors.
