Figure 1: Current Account Balance in Mauritius (2016-2024)
Source: IMF 2019, Mauritius 2019 Article IV Consultation. Note: (*) Figures from 2019 onwards are projections.
Total merchandise imports to Mauritius increased to USD 5.7 billion in 2018, from an annual average of USD 4.8 billion for 2015 to 2017[1]. Exports increased to USD 2.4 billion in 2018, from an annual average of USSD 2.3 billion for 2015 to 2017[2]. The slower growth in exports has deteriorated Mauritius’s current account deficit from an average of -USD 711.0 million (approx. -5.3% of GDP) for 2016 to 2018, to a deficit of -USD 1.1 billion (approx. -7.4% of GDP) in 2019[3]. The slower growth in export earnings has deteriorated Mauritius’s balance of payments but gross official reserves have increased due to the persistent capital and financial account surplus.
Figure 2: Capital and Financial Account Balance in Mauritius (2016-2024)
Source: IMF 2019, Mauritius 2019 Article IV Consultation. Note: (*) Figures from 2019 onwards are projections.
Mauritius’s capital and financial account balance deteriorated from a surplus (net inflows) averaging USD 1.3 billion (approx. 10.1% of GDP) for 2016 to 2018, to a surplus of USD 1.2 billion (approx. 8.0% of GDP) in 2019[4]. As a result, Mauritius’s balance of payments deteriorated from a surplus averaging USD 638.3 million (approx. 4.9% of GDP) for 2016 to 2018, to a surplus of USD 93.0 million (approx. 0.6% of GDP) in 2019[5]. However, gross official reserves increased from USD 4.9 billion in 2016 to USD 6.3 billion in 2018, and continued increasing to USD 6.4 billion in 2019[6]. During this period, Mauritius experienced increasing inward FDI inflows.
Figure 3: Gross Official Reserves and Balance of Payment in Mauritius (2016-2024)
Source: IMF 2019, Mauritius 2019 Article IV Consultation. Note: (*) Figures from 2019 onwards are projections.
Inward FDI inflows increased from USD 216.5 million in 2015 to USD 443.0 million in 2017, before decreasing to USD 371.5 million in 2018[7]. As a result, Mauritius’s inward FDI stock increased from an average of USD 4.7 billion for 2015 to 2017, to USD 5.3 billion in 2018[8]. Mauritians’ investments abroad have also decreased as inward FDI to the country decreased.
Figure 4: Inward Foreign Direct Investment in Mauritius (2015-2018)
Sources: UNCTAD 2019, UNCTADStat Database.
Outward FDI outflows decreased from USD 99.7 million in 2015 to USD 85.5 million in 2017, and continued decreasing to USD 83.3 million in 2018[9]. As a result, Mauritius’s outward FDI stock increased from an average of USD 758.9 million for 2015 to 2017, to USD 851.5 million in 2018[10]. These capital flows have improved Mauritius’s balance of payment but have been adverse for the country’s net international FDI position.
Figure 5: Outward Foreign Direct Investment from Mauritius (2015-2018)
Sources: UNCTAD 2019, UNCTADStat Database.
Mauritius’s balance of payment has been supported by the persistent capital and financial account surplus despite the widening current account deficit in the period from 2015 to 2018. Outward FDI flows have been decreasing as inward FDI inflows decreased. Mauritius’s net international FDI position deteriorated from net liabilities amounting to an average of -USD 4.2 billion (approx. -33.8% of GDP) for 2015 to 2017, to net liabilities amounting -USD 4.8 billion (approx. -33.3% of GDP) in 2018[11].
Figure 6: International Foreign Direct Investment Position in Mauritius (2015-2018)
Sources: UNCTAD 2019, UNCTADStat Database.
At these levels Mauritius’s foreign liabilities remain sustainable yet significant proportion of GDP. Given the relatively narrow domestic capital markets, Mauritius should focus on attracting inward FDI in sectors that will expand its productive capacity and diversify its exports because the country is still heavily dependent on agricultural, diamonds, and clothing and textile exports. Nevertheless, Mauritius’s balance of payments surplus is projected to improve to a wider surplus in the medium-term, which is projected to support growth of gross official reserves.
A slight moderation of the current account deficit and the steady capital and financial account surplus should support a recovery in Mauritius’s balance of payments in the forward-looking medium-term. The current account deficit is projected to widen from a deficit of -USD 1.1 billion (approx. -7.4% of GDP) in 2019 to an average of -USD 1.0 billion (approx. -5.6% of GDP) from 2020 to 2024[12]. Mauritius’s capital and financial account balance is projected to remain steady at a surplus (net inflows) averaging USD 1.2 billion (approx. 6.9% of GDP) from 2020 to 2024[13]. Therefore, the balance of payment is projected to improve from a surplus of USD 129.0 million in 2020 to a surplus of USD 356.0 million in 2024, which is equivalent to an average surplus of USD 222.2 million (approx. 1.2% of GDP)[14]. Thus, Mauritius’s gross official reserves are projected to increase from USD 6.6 billion in 2020, to USD 7.5 billion in 2024[15].
[1] UNCTAD 2019. UNCTADStat Database, United Nations Conference on Trade and Development: Geneva. Available At: https://unctadstat.unctad.org/ [Last Accessed: 8 March 2020].
[2] UNCTAD 2019. UNCTADStat Database, ibid.
[3] IMF 2019. Mauritius 2019 Article IV Consultation, International Monetary Fund: Washington, D. C. Available At: https://www.imf.org/ [Last Accessed: 8 March 2020].
[4] IMF 2019. Mauritius 2019 Article IV Consultation, ibid.
[5] IMF 2019. Mauritius 2019 Article IV Consultation, ibid. There are relatively significant errors and omissions in Mauritius’s balance of payments data equivalent to -USD 100.0 million in 2016 and USD 135.0 million in 2017.
[6] IMF 2019. Mauritius 2019 Article IV Consultation, ibid.
[7] UNCTAD 2019. UNCTADStat Database, ibid.
[8] UNCTAD 2019. UNCTADStat Database, ibid.
[9] UNCTAD 2019. UNCTADStat Database, ibid.
[10] UNCTAD 2019. UNCTADStat Database, ibid.
[11] UNCTAD 2019. UNCTADStat Database, ibid.
[12] IMF 2019. Mauritius 2019 Article IV Consultation, ibid.
[13] IMF 2019. Mauritius 2019 Article IV Consultation, ibid.
[14] IMF 2019. Mauritius 2019 Article IV Consultation, ibid.
[15] IMF 2019. Mauritius 2019 Article IV Consultation, ibid.