Outlook 2023 – Macroeconomic indicators: there will be growth, but…

5%. This is Finance, Statistics Mauritius and also Bank of Mauritius growth rate forecast this new year. For Eric Ng, these predictions seem achievable. “However, the main thing is not the overall ratio.

What is important is to have a balanced growth based not on a single sector, i.e. tourism, but on several industries such as manufacturing and the financial sector, among others. There should be a balance between consumption, investment and export,” the economist adds.

As for Manisha Dookhony, she is cautious. “There are many uncertainties. The pace of growth will depend on the evolution of the Repo rate,” he asserts. Nalini Burn agrees. “We need to see what the sources and components of growth will be. It has been fueled by consumption so far, itself a debt. With recent increases in interest rates, things seem more complicated. It is difficult to make a forecast, because we do not know whether the interest rate increase will be maintained or whether there will be a decline in the recession”, – emphasizes the economist.

For his part, Swadicq Nuthay warns that 2023 will be more difficult than 2022, as the country’s structural problems have not yet been resolved. According to Rajeev Hasnah, not everything is so bleak. “We can count on the ingenuity and resilience of key economic players across sectors to continue in the right direction,” he concludes.

Evolution of growth rate
year Growth rate
2019 2.9%
2020 14.6% contraction due to pandemic
2021 3.5%
2022 7.8%
2023* 5%
* Projected by Banque de Maurice, Mauritius Ministry of Finance and Statistics

Inflation: Calm?

The main problem in 2022 was inflation. Will it be the same this year? “I don’t see inflation falling in February with the electricity price hike and its snowball effect,” says Swadicq Nuthay. It’s not Nalini Burn who says otherwise. “We expect traders to transfer additional costs to product prices. This will boost inflation. However, the effects will not be the same for all, as costs vary with income, with much inequality, especially for the most deprived.”

For Rajeev Hasnah, it is clear that inflationary pressures will continue. “It is very difficult to predict what the intensity of this inflation will be and its direction, because a number of internal factors come into play,” he notes.

However, the rate is expected to decrease in 2023 compared to 2022: “International forecasts speak of a decrease in inflation. These are based on the probable improvement of the situation in Ukraine. That is, if China increases its demand, prices will rise again. This will boost inflation. But during a recession, commodity and energy prices will fall. How big this enemy will be in Mauritius remains to be seen,” said Manisha Dookhony.

Eric Ng, for his part, believes that inflation will fall below 10%. “The question is, will inflation fall to a reasonable level of 3%?” I highly doubt that accommodative monetary policy will continue. In addition, the payment of wage compensation – this unit and as a whole – and the increase in electricity tariffs are two inflationary factors that will follow us this year. This will slow down the inflation rate,” says our interlocutor.

Towards low inflation
2022 10.6%
2023* Between 5% and 6%
* Source: Bank of Mauritius

Preoccupation: restless brain flow

Swadicq Nuthay is adamant: the “mismatch” between supply and demand will continue. Manisha Dookhony agrees.

“On the one hand, several sectors, such as the financial sector, information and communication technologies or tourism, are hiring, but cannot fill certain positions. On the other hand, we have young people who are looking for work but do not have the necessary skills. This problem will continue,” he fears.

Rajeev Hasnah said he was worried about the massive brain drain. “As a result, the medium-term outlook for our business sectors looks challenging and exciting,” he warns. For Eric Ng, we shouldn’t expect much improvement in the labor market. “The unemployment rate should remain above 6%. Many businesses are affected by rising prices and interest rates. They will adopt a cost-cutting policy. This will curb their desire to hire except in cases of need,” he says.

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