What is your assessment of the MauriƟan economy?
Despite the uncertainƟes plaguing over the global economy during 2013, MauriƟus had a decent
performance with GDP growing by 3.2% as compared to 3.4% in 2012. An in-depth analysis of the
island’s macro-economic indicators however reveals some structural weaknesses and boƩlenecks,
impacƟng negaƟvely on our capacity to grow at a higher pace.
One of the most visible signs is the current account deficit. The situaƟon has deteriorated over the
years as consumpƟon outpace producƟon levels: we have gone from a current account surplus of
6% in 2001 to a deficit of 12.6% in 2011 before improving slightly to a deficit level of 10% in 2013.
The year 2014 can be a turning point for the MauriƟan economy as the developed world, and
especially our main trading partners including Europe, recover and opƟmisƟc global growth forecasts
surface. I believe that a technical rebound can be in the cards for MauriƟus in 2014 with GDP growth
of 3.5%-3.8%.
Some economic indicators paint a far from brilliant picture of the MauriƟan economy. On one hand,
GDP growth and inflaƟon rate are two main posiƟve macro-economic indicators but a closer look
at our macro-economic indicators does shed some concerns about the deterioraƟng structural
weaknesses.
As menƟoned above, current account deficit is a major source of concern but this is not the sole
problem. We have to address the problem of investments too very rapidly. The rate of investments
is on a descending trend, going from 26% of GDP in 2009 to 21.5% currently. This situaƟon calls out
for acƟon since the raƟo of investments to GDP shows the value added of domesƟc producƟon that
is invested in the future. What is even worse is the declining level of investments from the private
sector. The private sector has lost its verve and vivacity of former days when it launched itself into
new projects and ventures.
INTERVIEW
Swadick Nuthay, Chief ExecuƟve AfrAsia Capital Management
Swadick Nuthay, Chief ExecuƟve of AfrAsia
Capital Management
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We also have problems with our insƟtuƟons, most notably with
structural boƩlenecks, which are hampering development. We
have already embarked on the path of reforms of our insƟtuƟonal
framework but there is sƟll a long way to go for the ease of doing
business in MauriƟus. InformaƟon is lacking on the potenƟal of
some sectors. The involvement of private investments in public
infrastructure and uƟliƟes projects has been broached and yet there
is not really a legal framework for these public-private partnership
projects. Public infrastructure could have been a very good niche for
private sector investments.
Do you think that GDP growth in 2013 could have been
more than 3.2%?
We couldhave indeedexceeded the3.2%, but only if all thenecessary
condiƟons were fulfilled. We tend to blame the global crisis for our
lacklustre performance. The crisis has certainly affected us adversely
as it has considerably weakened our foundaƟons, but we have, all the
same, a long way to go to bring reforms to the MauriƟan economy
and to solve our structural issues. If we had had more insight about
our development strategy and if reforms were implemented more
rapidly, then our growth could have been beƩer.
What are the factors that are hindering economic growth?
These factors come in two folds. To start with, we are sƟll heavily
dependent on Europe though we have recently started to diversify
our markets. With the recent global economic crisis, we experienced
a domino effect from the cluster of countries on which we depend
and which were negaƟvely impacted.
Secondly, I think that we have to align our investment promoƟon
strategy with our objecƟves. Very oŌen, we announce the
development of a sector, like for e.g, the Land-Based Oceanic
Industry. Yet, when we look at the inflows of foreign investments,
we note that these are not at all directed in this sector. We note
also that too much focus has been put on property development
to aƩract FDI. I believe that this is low quality FDI with low value
added to the economy. FDI towards more producƟve sectors has
been relaƟvely low in recent years. There is a mismatch between
our long-term strategies and targets. Nevertheless, we cannot afford
to refuse foreign direct investment, even if it is regarded as of low
value-added.
What about the reforms that MauriƟus has embarked
into?
We have made considerable progress in that maƩer but even so,
there is sƟll much to do. The ease of doing business is of utmost
importance. There is sƟll a lot of boƩleneck in the system and this is
a major cost to any project.
To address some structural issues will not be an easy thing.
Besides, I believe also need to review the welfare state. Government
cannot conƟnue to finance all services, such as educaƟon, health or
To address some structural issues will
not be an easy thing.
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