Economic activities: Business confidence on the upswing, says Chamber of Commerce

Based on the quarterly business survey conducted between 5 and 25 January 2017 by the Mauritius Chamber of Commerce and Industry (MCCI), there is an improvement in the level of business confidence for the fourth quarter of 2016. The business confidence index has increased by 4.5 points (4.9 per cent) between September and December 2016 and now stands at 97.5 points. This increase comes after an unfavourable third quarter, says the MCCI.

The confidence indicator declined 5.1 percent in the third quarter of 2016. “However, confidence still remains in static territory and falls below the long-term average of 100 basis points. This implies that the Mauritian economy has experienced a positive but moderate evolution over the past three months,” says the Chamber of Commerce.

Future prospects are favourable

The economic barometer, based on the CESifo methodology, shows the evolution of two components of the business climate index, namely the arithmetic average of the assessments of the current situation and the economic outlook for the next three months.

According to the latest survey, the business climate indicator improved in the fourth quarter of 2016. This increase can be explained, on the one hand, by an improvement in entrepreneurs’ assessments of the economic situation between October and December 2016 and, on the other hand, positive assessments on future prospects.

The first component, entrepreneur evaluations on business development, compared to sales figures, during the fourth quarter, the balance of opinions is positive to more than 4 per cent. About 25 per cent reported improved sales in the last quarter, 54 per cent, sales stabilised, and a 21 per cent decline in sales.

On the second component, estimates of future prospects, the balance of expectations of entrepreneurs is positive at 5.3 per cent. At the end of last year, 31 per cent of respondents expect business to improve over the next 12 months, 44 per cent to stabilise sales and 25 per cent to deteriorate.

Rising sectoral confidence

At the sectoral level, there is a general upturn in the confidence indices in the last quarter of 2016. The services sector recorded the largest increase in the sector indicator, at 6.1 per cent. “Much of this increase is based on a positive expectation of entrepreneurs for future business developments. The balance of future valuations is positive at 6.3 points. The other variables used in estimating the indicator are also favourable,” says the MCCI in its report. For the manufacturing sector, the index increased by 5.1% at the end of the fourth quarter last year after the decline of 2.9% recorded at the end of the previous three-month period. “All variables used in estimating the indicator for this sector are favourable,” reads the report. According to respondents, sales are increasing. Economic operators expect an improvement in sales for the period spanning from January to March 2017 as compared to the same quarter in 2016.

“For the trade sector, we see a slight increase in the confidence indicator at a rate of 3.4 per cent.” Merchants saw a stagnation of their sales during the last three months of 2016 as compared to the same quarter in 2015. However, operators expect a recovery during the first three months of 2017.