The latest and revamped SBM Insights Report 2020 has forecasted real GDP growth to hover between 6.6 percent and 6.8 percent in 2022 as compared to 4.3 percent for 2021. It remarked that the nationwide rebound is attributed to a surge in activities spanning across several economic sectors such as business and financial services as well as ICT sectors clocking an appreciable growth rate, buoyed by sound fundamentals and opportunities, correlated to the changing operating environment.
The report, signed by Group Head Research, Strategic Planning and Lead Economist Nuvin Balloo advocated the need to target well-structured reforms and incentivising investment deemed to upgrade public infrastructures, strengthen competitiveness of sectors, expand economic space and diversify exports in terms of offering and markets. All this is expected to go a long way towards enhancing the appeal and credibility of the Mauritius International Financial Centre (IFC) as a gateway for trade and investment within the ‘Golden Triangle’ linking the Middle East, Asia and Africa, as also to spur market connectivity, together with deepening a well-calibrated, openness of the economy to foreign talents and expertise, among others. It also called on the need to focus on growth opportunities pertaining to technology and innovation.
While inflation in Euro terms is forecast to reach 5.1 percent in January considered to be the highest, headline inflation has reached 4.6 percent during the 12 month period in January as compared to the corresponding period of the previous year at 2.5 percent. As per the latest estimates for September end 2021, the industry has garnered suitable buffers in the face of a testing environment where the aggregate capital adequacy ratio stood at 19.6 percent (well above the minimum regulatory threshold) and the ratio of gross non-performing loans to total loans plummeted to 4.5 percent as compared to 4.8 percent and 5 percent in March.
The report throws interesting insights mentioning promising order books adhering to operators, with key segments within the export-oriented manufacturing industry poised to post appreciable expansion trajectories in 2022. The latter is attributed to bolstering demand in foreign markets and favourable currency dynamics. It further adds on significant gains assuming operators are able to bank on opportunities offered by trade agreements recently inked, such as the Free Trade Agreement with China, the Comprehensive Economic Cooperation and Partnership Agreement with India as well as the protocols embedded within the context of the African Continental Free Trade Area.
The IFC is seen to witness an upsurge in its credibility and competitiveness following the exit of Mauritius from the FATF list of jurisdictions under increased monitoring as well as its delisting from the category of High-Risk Third Countries of the EU, coming as this does in the midst of current efforts spearheaded at deepening its value proposition and enhancing economic substance. Significant efforts are being undertaken to buttress the position of the jurisdiction, posing as a gateway for trade and investment within the ‘Golden Triangle’ linking Middle East, Asia and Africa.
The report’s Chief Editor Nuvin Balloo advocated, “As we move ahead, key success factors for the country would include (i) harnessing close and transparent collaboration, dialogue and synergies between the public and private sectors; (ii) embedding policy credibility and sound macroeconomic frameworks to maintain the trust of citizens, investors, markets and stakeholders; and (iii) reinforcing project implementation and policy execution capabilities, backed by appropriate and well-engineered recourse to Public-Private Partnerships.”
He further adds that, in the same spirit, the setting up of the Project Implementation and Monitoring Agency, as well as the Public-Private Joint Committee, are laudable measures as the country moves to expedite investments and promote the national economic interests.
The need to achieve set fiscal and debt targets, the report mentions, can be fostered by creating suitable tax buoyancy, rationalising and prioritising recurrent expenditures without compromising on social objectives, entailing the efficient execution of infrastructure projects and reengineering the operations of public sector bodies. Holistically speaking, Mauritius can avail from the endorsement of a robust and flexible medium-term fiscal consolidation programme which is constituted of a strong mechanism moving towards the rebuilding of fiscal buffers and enhancing the credibility of public finances.
The Balance of Payment official estimates hint at a surplus position worth Rs 29.7 billion for the first nine months of 2021. A major improvement is anticipated pertaining to the deficit taking place in 2020, spurred by a better picture pertaining to capital inflows, particularly in terms of FDI and receipt of external loans by the Government. In the same vein, the ratio of Central Government debt to GDP is forecasted to decline to 8 percent as at June 2022, before being lowered to 60 percent by 2030.
While SBM Insights lauds the anticipated firming up of economic activities being seen as ‘encouraging’, it cautions on downside risks to the growth outlook in 2022 which include: intensification of COVID 19 inflections globally and the emergence of the fast spreader of transmissible and aggressive virus strains locally that may adversely impact external demand for local goods and services attributed to the long-lasting and stricter containment measures (including partial lockdowns and travel restrictions) as well as subdued private consumption abroad; and (ii) lead to lingering trade disruptions in view of port closures, mobility restrictions and supply-side bottlenecks which as a result may also complicate recovery in terms of deceleration in the pace of earmarked public and private investments.
Furthermore, the fast tightening of global financing conditions in anticipation of future monetary policy moves in advanced economies is likely to have repercussions on debt financing needs and capital inflows as well as a faster than required and sub-optimal unwinding of support and relief measure locally having adverse bearings on sectoral value-added, corporate solvency, and employment protection.
