MCB Focus – Updated forecast for 2018

As per current indications, the country’s economic expansion is likely to improve slightly this year when compared to 2017. Thus, while staying close to the prognosis formulated by Statistics Mauritius, the IMF and World Bank, real GDP growth is, as per our baseline scenario, predicted to increase to 3.9% when measured at both market and basic prices. Yet, after taking stock of our socio-economic ambitions and albeit moving closer to the country’s current potential growth, the forecasted expansion rate is set to remain sub-par, the more so when juxtaposed against the firming up of the global recovery process. When compared to our October last forecast, our projections represent a downgrade of 10 basis points in each case, prompted essentially by a combination of marginal reassessments of some sectorial forecasts and the delayed kick-start of key projects forming part of the Road Decongestion Programme relative to our October predictions.

Noticeably, in the wake of recent floods that have hit several cultivated areas, the non-sugar agriculture sector is now forecast to post a more inhibited performance than previously expected, while our already modest prediction for sugar has been further scaled down, to some extent reflecting signs that export prices on the European market would be lower than previously anticipated, partly linked to supply-side pressures prevailing in the aftermath of liberalising market access therein. Here, it is worthwhile to note that, along with these segments and despite measures executed to boost activity levels, several strategically-important sectors of the Mauritian economy – notably the export- and domestic-oriented manufacturing industries – are foreseen to post restrained growth in value added this year, mainly owing to uncertain market access and local structural bottlenecks. In another respect, a marginally less upbeat outlook is now being nurtured for the tourism sector, after notably factoring in the increasingly competitive market environment. Yet, in spite of the statistical impact of the high base effect attributable to the good outcomes of the last couple of years, the sector would continue to post an appreciable growth and cast a prominent impact on real GDP growth owing to its competitiveness and market diversification breakthroughs and the partial liberalisation of the country’s air access.

Noteworthy performances are also likely to be registered by the ICT and financial and business services industries, although some global business operators are likely to face up to challenges in adapting to the evolving operating environment, in particular in relation to their endeavours to diversify into new markets and broaden the product base. For its part, while the sector is set to stay as a key driver of nationwide growth in output this year when taking into account the line-up of announced large-scale infrastructure projects, we have, at the same time, downgraded our outlook for construction compared to our prior forecast given relatively less optimistic predictions on the investment front.

 

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