“Strong exports, weak balance: Mauritius at a crossroads”

CARE Ratings Africa and StraConsult Ltd Report

A decade of robust export expansion has strengthened Mauritius’ status as a regional trade hub, but widening trade deficits, demographic pressures, and a slow transition to high-value sectors underline profound structural weaknesses.

Mauritius has long cultivated its role as a strategic investment and trade gateway at the confluence of Africa, Asia, and Europe, leveraging a network of trade agreements to bolster growth, create jobs, and attract capital. Since the 1970s, the island economy has gradually shifted its focus beyond traditional manufacturing, developing pillars such as financial services and Global Business Companies (GBCs). Yet, this evolution has been accompanied by a stagnating agricultural sector, declining manufacturing performance, and a worrying reliance on low-complexity exports.

According to the Sectoral Overview and Evolution of Exports Report – June 2025, a joint publication of CARE Ratings Africa and StraConsult Ltd, the country’s gross value added (GVA) has become increasingly dominated by the tertiary sector. Financial and insurance activities have outpaced the once-dominant manufacturing industry since 2020, with financial services, including banking, leasing, investment funds, securities, and fintech, emerging as powerful growth drivers.

Between 2014 and 2024, the value of goods and services exports rose by 52%, from Rs 210 billion to Rs 321 billion, demonstrating robust growth. Services now account for 66% of total exports, reflecting the deepening of value addition across activities like travel, transport, business services, and finance. Nonetheless, imports grew even faster — up 73% in the same period — swelling the trade deficit from Rs 22 billion in 2014 to Rs 80 billion in 2024. This imbalance underscores a pattern of import dependency that could strain the Mauritian economy if not addressed.

The Export Oriented Enterprises (EOEs) sector, a critical engine of Mauritius’ economic miracle in the 1980s, has experienced a steady erosion of its share of the manufacturing sector’s GVA, falling from 53% in the 1980s to around 30% in 2023. Conversely, Domestic Oriented Enterprises (DOEs) have expanded their role, making up nearly 68% of manufacturing GVA in 2023 and helping to support local consumption and reduce reliance on imports.

Zooming in on export destinations, South Africa has been the leading buyer of Mauritian goods between 2020 and 2024, absorbing 14% of total domestic exports, followed by the UK (12%), the US (10%), France (10%), and Madagascar (8%). Mauritius’ exports to the US, helped by the Africa Growth and Opportunity Act (AGOA), rose from Rs 4.8 billion in 2020 to Rs 6.8 billion in 2024, with garments (HS Chapters 61 and 62) representing 44% of that trade. However, the expiry of the AGOA extension in 2025 introduces uncertainty around future preferential access to the US market, especially given mounting calls for regionalisation and more intra-African trade under the African Continental Free Trade Area (AfCFTA).

The African continent has become a central export market, accounting for 32% of Mauritius’ global domestic exports in 2022, with South Africa, Madagascar, and Kenya among the top destinations. Despite a 15% fall in exports to Africa in 2023, the sector rebounded by 17% in 2024 to reach Rs 19.5 billion. Garments and textile products, such as men’s cotton trousers and T-shirts, have dominated Mauritian shipments to Africa, reflecting both the island’s legacy and opportunities in a continent whose fashion industry is projected to grow on the back of a youthful, urbanising population. Yet the report cautions that barriers such as skills gaps and inadequate infrastructure in African partner countries could inhibit deeper integration.

The Economic Complexity Index (ECI), which measures a country’s productive knowledge and competitiveness, shows Mauritius improving from –0.46 in 2000 to 0.09 in 2022, moving its global rank from 90^th to 58^th out of 133 countries. However, Mauritius’ export basket is still dominated by low-complexity products like textiles, apparel, and fish preparations, limiting its ability to climb the global value chain.

“Diversifying from traditional textiles toward more technologically advanced goods could reduce vulnerability”

Encouragingly, some higher-technology goods are starting to gain a foothold. Medical devices (HS code 9018) rose in value from Rs 1.1 billion in 2020 to Rs 2 billion in 2024, a growth of 76%, now appearing in the top 15 export products. France, India, Germany, and the US together accounted for 97% of Mauritian medical device exports in 2024, but new markets with high potential, such as the Netherlands, China, and Belgium, could help further diversify and deepen this promising sector.

Beyond its traditional partners, Mauritius has struggled to maximise opportunities under bilateral agreements with countries such as Pakistan, Türkiye, and the United Arab Emirates (UAE). For instance, the PTA with Pakistan signed in 2007 and the FTA with Türkiye in 2011 have seen only limited gains. Exports to Pakistan, largely in waste and scrap iron, have declined since 2020, while exports to Türkiye, mainly in cotton garments, remain small despite a recent rebound. A new Comprehensive Economic Partnership Agreement signed with the UAE in 2024 could help expand beyond current sugar exports to jewellery and diamonds, which have been flagged as products with strong export potential.

Foreign direct investment patterns also reveal vulnerabilities. In 2023, half of all FDI inflows were directed toward the real estate sector, diverting capital away from more productive industries that could help build export capacity and economic resilience. Combined with a greying population and a persistent brain drain, these trends raise questions about Mauritius’ ability to finance the next wave of transformation.

The government, acknowledging these challenges, has expressed determination to reinvest in the manufacturing sector with a renewed focus on export-oriented enterprises. Diversifying from traditional textiles toward more technologically advanced goods — such as medical equipment — could help improve economic complexity and reduce vulnerability to shifts in global demand.

While Mauritius rightly celebrates 57 years of post-independence progress, its ability to adapt to the coming decade’s challenges — including demographic shifts, trade preferences, and a fragile global economy — will determine whether its ambitions as an international trading hub can be sustained.

(Source: Sectoral Overview and Evolution of Exports Report – June 2025, published by CARE Ratings Africa and StraConsult Ltd.)