| Geography
Area: 1,865 sq. km. (720 sq. mi.), about the size of Rhode Island; 500 miles east of Madagascar, in the Indian Ocean. Dependencies: Rodrigues Island, the Agalega Islands and Cargados Carajos Shoals; Mauritius also claims sovereignty over the Chagos Archipelago, part of the British Indian Ocean Territory. Rugged mountains cover more than 75% of the country. The vegetation is diverse and rich comprising tropical and subtropical species, from mango and palms to hardwoods. About half the country is still covered with primary forests. Economy Mauritius has one of the strongest economies in Africa, with a GDP of $4.5 billion in 2001 and per capita income close to $3,800. The economy has sustained high 6% annual growth rate for the last two decades--first driven by sugar, then textiles/apparel and tourism, and most recently by financial services. Independent assessments uniformly rank Mauritius as one of the most competitive economies in Africa. With a per capita income of U.S. $3,800, Mauritius is now classified as a middle-income country and ranks, on the basis of the recent Human Development Index for 173 countries, 67th globally, 40th among developing countries, and second in Africa. Economic growth slowed down in 2001, falling to 5.8% from 9.3% in 1999, mainly as a result of a lower growth rate in the sugar and tourism sector. In 2002, the economy is expected to expand by 4%. Over the past 5 years Mauritius registered balance-of-payments surpluses leading to a comfortable external reserves position (currently equivalent to more than 9 months of imports), an external debt service ratio of only 7%, and modest single-digit inflation on average. The inflation rate increased from 4.2% in 2000 to 5.4% in 2001. It is expected to reach 6.3% in 2002, owing to the recent increase in the rate of VAT from 12% to 15% as well as large increases in government spending. However, the rising trend in unemployment and the deterioration in public finances are matters of concern. The unemployment rate rose steadily from 2.7% in 1991 to 9.2% in 2001, representing 48,000 unemployed people. It is expected to reach more than 10% in 2002. The budget deficit increased from 3.8% of GDP in fiscal year 1999-2000 (July-June) to 6.7% in FY 2001-02. As a result of a series of fiscal measures taken by the government, the budget deficit is expected to fall to 6% on FY 2002-03. However, the government's objective is to bring down the budget deficit gradually to about 3% of GDP by FY 2005-06. While Mauritius relies heavily on exports of sugar, textiles/garments, and tourism, services like Freeport, offshore business, and financial services constitute other pillars of the economy. The offshore sector is playing an increasingly important role in the financial services sector and is emerging as a growth vehicle for the economy. At the end of October 2002, the number of companies registered in the offshore sector reached 20,111. The Mauritius Freeport, the customs duty-free zone in the port and airport, aims at transforming Mauritius into a major regional distribution, transshipment, and marketing center. The Freeport zone provides facilities for warehousing, transshipment operations and minor processing, simple assembly, and repackaging. At the end of October 2002, the total number of Freeport licenses issued reached 940, of which 230 companies were operational, mostly in trading activities. |
There has been growing realization on the part of the government that the traditional industries of sugar, textile, and tourism are no longer capable of sustaining further wealth and job creation. Accordingly, the government is giving high priority to the development of the Information and Communications Technologies (ICT) sector with the aim of transforming Mauritius into a cyber island. The Business Parks of Mauritius, Ltd. was set up by the government to spearhead the development, construction, and management of major business and IT parks in Mauritius. It has secured a line of credit of $100 million from the Indian Government for the creation of the first cyber-city at Ebene, which is expected to be completed by December 2003. Already a number of renowned international firms engaged in software development, ICT training, PC manufacturing and call centers, are planning to start operations in the cyber city. Also expected to give a further boost to the development of the ICT sector are the recent operation of the Southern Africa Far East (SAFE) optical fiber cable and the liberalization of telecommunications services beginning January 1, 2003. Although the near-term outlook for growth is encouraging, the challenges facing Mauritius in the long-term are daunting. On the
domestic front, the decline in fertility and the aging of the population will decrease the available pool of labor for the
economy, thus reducing the long-term growth potential. Also, before the end of this decade, the trade preferences and the market
protection on which Mauritius has built its success will be eroded by the forces of globalizaton, liberalization, and economic
integration. The elimination in December 2004 of the global quotas on clothing under the Multi-Fiber Arrangement will expose the
local textile sector to competition from other exporting countries, including those in Asia and South America. In the case of
sugar, ongoing negotiations between the European Union and sugar-exporting countries and future multilateral liberalization will
likely reduce the profitability of the Mauritian sugar industry. |