“Mauritius Braces for Slower Growth as Trade Pressures and Climate Risks Persist”

Mauritius’ economic momentum is projected to slow further in 2025 as global trade tensions, climate variability, and sectoral weaknesses converge to dampen growth prospects. According to the Mauritius Economic Update – May 2025, published by CARE Ratings Africa, real GDP growth is expected to moderate to 3.0%, down from earlier forecasts, while inflation, external trade, and tourism remain under pressure.

The International Monetary Fund (IMF) has revised its 2025 GDP growth forecast for Mauritius to 3.0%, down from 4.0% projected in October 2024. The downward adjustment reflects weakened global demand stemming from geoeconomic fragmentation, escalating trade conflicts, and the impact of climate-related events, including severe droughts and cyclones. The Government of Mauritius expects growth to decelerate to 3.3% in 2025, compared to 4.7% in 2024 and 5.0% in 2023.

Domestically, output is expected to be supported by sectors such as non-sugar agriculture, information and communication technology (ICT), and financial services. However, construction and accommodation and food services – previously strong drivers of growth –are not anticipated to regain traction in the near term.

External Trade and Tariff Concerns

Mauritius’ export performance in 2024 stood at 10.1% of GDP, with over half comprised of high-value animal and animal products, including primates for medical research. However, global trade instability – heightened by the imposition of 40% reciprocal tariffs by the United States – has created considerable uncertainty. A temporary freeze on these tariffs to a universal rate of 10% offers short-term relief, but the outlook remains uncertain.

The February 2025 trade data reflect the strain: exports fell by 3.2% year-on-year to MUR 7.9 billion, while imports dropped by 6.2% to MUR 22.0 billion. The merchandise trade deficit narrowed to MUR 11.1 billion, down from MUR 16.9 billion in January. Mauritius’ key export destinations include the United Kingdom, France, Madagascar, South Africa, Spain, and the United States. Its major import partners remain China, Oman, India, South Africa, the UAE, and France.

Adding to the pressure, the expiration of the African Growth and Opportunity Act (AGOA) in September 2025 may significantly impact Mauritius’ textile and apparel exports. In this context, efforts to diversify the export base and develop domestic capacities become increasingly important.

Tourism: Recovery Falters After Initial Rebound

Tourist arrivals increased by 18% month-on-month in March 2025, reaching 113,472 visitors. However, cumulative arrivals from January to March amounted to 326,389 – representing a 5.8% decline compared to the same period in 2024. Gross tourism earnings for the first quarter stood at MUR 23.6 billion, a 5% increase year-on-year, supported by stronger per capita expenditure.

Despite a 5.7% year-on-year contribution to gross value added (GVA) by tourism in 2024, Statistics Mauritius projects stagnation in 2025. Declines in European arrivals and cyclone-related disruptions have been cited among the primary reasons. The government is responding with intensified marketing campaigns and renewed air connectivity. However, the sector remains susceptible to global economic conditions and environmental shocks.

Inflation and Monetary Policy: Mixed Signals

Headline inflation rose to 1.8% year-on-year in March 2025, up from 0.1% in February, largely due to a 5.9% increase in food and non-alcoholic beverage prices. This remains below the lower bound of the Bank of Mauritius (BoM)’s target range of 2% to 5%. Core inflation, which excludes volatile items such as food, energy, and regulated prices, has remained elevated at 6.0% for three consecutive months.

In response to persistent inflationary pressures, particularly in the services sector, the BoM maintained the key rate at 4.50% during its May 7 Monetary Policy Committee meeting. The central bank anticipates average inflation for 2025 to hover around 3.5%, in line with IMF projections and influenced by falling global commodity prices and reduced domestic fuel taxes.

Currency and Reserves: Rupee Strengthens, Reserves Erode

The Mauritian Rupee (MUR) appreciated by 3.4% against the US dollar over the February-April 2025 period, and by 3.3% over the previous six months. The appreciation has been driven by USD weakness amid ongoing trade tensions and BoM’s foreign exchange interventions. Since January 2025, the central bank has sold USD 50 million to domestic banks to support the MUR, resulting in a 3.6% appreciation.

However, official reserves decreased by 2.5% month-on-month in April, reaching MUR 392.1 billion (approximately USD 8.7 billion). The import cover fell marginally to 11.9 months, still considered sufficient to absorb external shocks.

Key Economic Indicators (March 2025)

• GDP Growth (Projected, 2025):3% (Government), 3.0% (IMF)
• Tourist Arrivals (Jan-Mar):326,389 (-5.8% YoY)
• Gross Tourism Earnings (Q1):MUR 23.6 billion (+5% YoY)
• Headline Inflation:8% YoY (March)
• Core Inflation:0% YoY (March)
• BoM Key Policy Rate:5%
• Exports (Feb):MUR 7.9 billion (-3.2% YoY)
• Imports (Feb):MUR 22.0 billion (-6.2% YoY)
• Trade Deficit (Feb):MUR 11.1 billion
• Foreign Exchange Reserves (April):MUR 392.1 billion
• Import Cover:9 months
• USD/MUR (March average):9

Strategic Outlook

Navigating 2025 will require a coordinated policy response focused on economic diversification, resilience to climate shocks, and strategic partnerships to mitigate risks from external trade policy shifts. Mauritius’ ability to maintain macroeconomic stability amid uncertainty will be crucial as global volatility continues to test small island economies.

(Source: Mauritius Economic Update – May 2025, CARE Ratings Africa)