Mauritius is expected to grow at 3.7% in 2014 and 4% in 2015 and 2016 each, says the IMF’s latest World Economic Outlook (WEO) released last week. This is in line with data released by Statistics Mauritius at the end of last month, forecasting growth of 3.7% this year, after 3.2% GDP growth in 2013.
Also, in a welcome development for Mauritius, the IMF notes that economic growth has turned positive in the euro area. The World Economic Outlook notes that, across the euro area, a strong reduction in the pace of fiscal tightening is expected to help lift growth.
It is important to note that the EU is an important market for the island economy, and any uplift in the economy of the euro area can be expected to translate into gains across its traditionally strong tourism, textile and real estate sectors.
Also, new markets for Mauritius such as China and India have seen bullish forecasts from the IMF in its latest global economic outlook report.
The forecast for China is that growth will remain broadly unchanged at about 7½ percent in 2014–15 as the authorities seek to put the economy on a more balanced and sustainable growth path. In India, real GDP growth is projected to strengthen, partly due to government efforts to revive investment growth.
Finally, in keeping with Mauritius’ Africa strategy, it is important to look at growth prospects for the continent’s giants such as South Africa and Nigeria.
Nigeria’s growth remained strong in 2013 at 6.3% owing to relatively high oil prices, despite security problems in the north and large-scale oil theft in the first half of 2013.
In contrast, growth in South Africa continued to decelerate with only 1.9% GDP growth in 2013, constrained by tense industrial relations in the mining sector, tight electricity supply, anemic private investment, and weak consumer and investor confidence. For 2014, Nigeria and South Africa are expected to grow at 7.1% and 2.3% respectively.
Meanwhile, in sub-Saharan Africa, growth continues at a strong pace, and is expected to increase from 4.8% in 2013 to 5½% in 2014–15 on the back of commodity-related projects.
However, the IMF cautions that North Africa and the Middle East would continue to face challenging conditions, with regional growth projected to rise only moderately in 2014–15. Most of the recovery is due to the oil-exporting economies, while many oil-importing economies continue to struggle with difficult sociopolitical and security conditions.
Finally, a major impulse to global growth has come from the United States, where annual growth in 2014–15 is projected to be above trend at about 2¾ percent. More moderate fiscal consolidation helps; support also comes from conducive monetary conditions, a recovering real estate sector, and higher household wealth.
Overall, the IMF forecasts global growth to average 3.6 percent in 2014―up from 3 percent in 2013―and to rise to 3.9 percent in 2015.
The strengthening of the recovery from the Great Recession in the advanced economies is a welcome development, according to IMF staff. But the latest WEO also emphasizes that growth remains subpar and uneven across the globe.
In this setting, the global economy is still fragile despite improved prospects, and important risks—both old and new—remain. Risks to economic growth include finishing the financial sector reform agenda, high debt levels in many countries, stubbornly high unemployment, and concerns about emerging markets.
Image (IMF): The strengthening of the recovery from the Great Recession in the advanced economies is a welcome development, according to IMF staff.
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