What awaits us in 2018?

We are already in 2018! It’s already four years since the promised economic miracle is being awaited. This new year will see a number of projects and new measures to keep the economic momentum going. Will Mauritius succeed in its path to attain the status of a high income country?

The Metro Express is the biggest project of 2018. Simultaneously, there are other vast infrastructural projects that will either kick off or move on at higher pace, namely the transformation of the Victoria and Immigration Bus Stations in Port Louis, the second phase of the Ring Road, the Coromandel-Sorèze link road, the new Phoenix Interchange, among others.

The construction sector will also be booming with all the Smart Cities projects, the residential projects under the Property Development Scheme (PDS), the new Supreme Court building, construction of new hospitals, etc. Other sectors that will be in full bloom include the financial services sector, the cinema industry and the energy sector.

2018 is also the year of the implementation of the minimum salary. As from this January, it will be illegal to hire workers in Mauritius for less than Rs 9,000 a month. This month also sees the payment of the salary compensation of Rs 360 across the board, a measure which will necessitates a monetary injection of Rs 2.2 billion.

The Negative Income Tax will continue this year. At institutional level, there will be the coming into operation of the Economic Development Board, a new entity that sees the merger of the Board of Investment, the Financial Services Promotion Authority, Enterprise Mauritius and the Mauritius Africa Fund. The objective is to create better synergies in investment and trade promotion, making further business inroads into Africa and further streamlining the business climate in Mauritius to improve investment facilitation.

The EDB will also be the driving force behind investment projects, tapping into new sectors and segments in order to create jobs and opportunities for entrepreneurs. The first results are expected to be seen in our Doing Business ranking next year and in the level of FDI achieved.

Economic forecasts

Contrary to previous years, the economic forecasts for 2018 by different stakeholders are very optimistic. In 2015/2016 the growth rate was expected to reach 5.3 percent but this never materializes, not even in 2016/2017.

For the year 2018, MCB Focus expects the growth rate to be 3.7% while SBM Insights forecasts a rate of 4.1%. The Bank of Mauritius is more optimistic with its forecast of a growth rate of 4.2%.  The IMF on its side predicts a global average growth rate of 3.7% for 2018.

Sectoral forecast

Real Estate

The reaL estate sector continues to dominate the economy, given its capacity to attract billions of rupees to our shores in terms of foreign direct investment. This year, the Smart Cities projects will reach an advanced stage. However, supply might exceed demand given that there are various projects competing with each other, and almost all of them are relying heavily on foreign ownership. The property boom is further putting much strain on water consumption and some regions are facing severe water shortages, which might put off potential buyers.

Construction

After a few years of slow growth, the construction sector is likely to benefit from a massive boom with so many projects in the pipeline. Whether it’s new roads, new public buildings, hospitals, residential units or business parks, the construction sector will stimulate the overall economy.

Manufacturing

The manufacturing sector has been in decline lately and this tendency may continue in 2018. This sector does not attract much foreign investment. Costs of production are increasing year by year and this year, the minimum salary is likely to impact the sector.

SMEs

It is too early to say whether the new SME Bill introduced will have any huge impact on the success of SMEs. The advent of SME Mauritius as the main organization to cater for the needs of SMEs might improve the situation. Nevertheless, SMEs are expecting more in terms of tax reforms and business facilitation.

Tourism

This is one sector that keeps thriving. The number of tourists in Mauritius reached 1,186,245 on 30 November 2017 while the figure for the corresponding period in 2016 was 1,127,093. The forecast for the total number of tourists for the year 2017 is estimated at 1,360,000 while the figure for 2018 is set at 1,425,000. Even the number of Mauritian nationals travelling abroad is rising every year, which is a sign of prosperity. According to Statistics Mauritius, around 204,000 Mauritian nationals travelled during the period January to September 2017, which is 10 per cent higher than the figure for the corresponding period in 2016.