The International Monetary Fund cut its 2012 forecast for economic growth in Mauritius to 3.7 percent from 4.1 percent, citing the need for greater investment and fiscal consolidation.
The Indian Ocean island is pushing to rely less on Europe, its main source of revenue from tourism and a major market for its textile, sugar and services industry, and has been branching into information technology, business outsourcing and offshore banking.
“The challenge for 2012 and beyond will be to maintain growth through increased public and private investment and productivity advances, while continuing medium-term fiscal consolidation to reduce economic vulnerabilities,” IMF mission chief to Mauritius Martin Petri told reporters, Reuters reports.
Tourism still accounts for about 10 percent of the island’s $10 billion economy, however, with European tourists typically making up some two-thirds of visitors.
In view of the protracted debt crisis in Europe, Mauritius’ government also said it may cut its growth forecast for 2012.
“In line with the gloomier outlook for the world economy, and particularly our main market Europe … This is going to have an effect on Mauritius growth,” Finance Minister Xavier Duval told a business leaders’ meeting.
“We are considering the possibility of issuing a new forecast which might be lower than 4 percent.”
“We are faced with a double-barrel shotgun with the depreciation of the euro, which will affect our companies invoicing in euros, and the loss in consumer confidence in Europe, which will impact on demands for our textile, sugar and services like tourism,” Duval said.
Still, the IMF said it saw the rupee as “broadly in equilibrium”.
It forecast inflation at 5 percent year-on-year in 2012. The country’s average annual rate of inflation fell in December for the first time in 18 months, indicating a possible peak in the rate.
Separately, Mauritius’s stock exchange said on Wednesday it hopes to introduce trading and clearing of Contracts For Difference on foreign underlying stocks and indices. CFDs are leveraged products that allow investors to speculate on price moves in a security without owning the underlying asset.
The exchange said it would work in the coming months on setting up a regulatory and operational framework for the implementation of the project.