Despite the outbreak of the global financial crisis, which has undercut external demand, reduced private inflows and increased uncertainty, the Mauritian economy has performed relatively well in 2009, regardless of its multiple vulnerabilities. GDP growth in 2009 is estimated at 3.1 percent.

As from mid 2009, the local economy has gained momentum, benefitting from the additional stimulus packages. The higher government consumption and public sector investment had contributed to boost the economy. In line with the global economic recovery, growth has started to pick up by the end of 2009 (a growth rate of 5 percent on a year-on-year basis for the final quarter 2009).

However the recovery has started to weaken in the course of 2010 and the GDP growth rate for 2010 should be 4.4 percent, well below full potential. The major contributors to GDP growth are real estate, renting and business activities (0.8 percentage points), manufacturing (0.5 percentage points), hotels and restaurants (0.5 percentage points), transport, storage and communications (0.5 percentage points) and financial intermediation (0.5 percentage points). Historical facts show that this is a relatively modest achievement and is well below potential.

We can identify three main factors behind this timid performance. First, the turmoil in the euro area has cast a shadow on the recovery of our economy. The lower than average growth on our key markets has put downward pressures on the external demand thus hindering the full advantage that Mauritius could have taken following the rebound in the world economy. Second, the appreciation of the rupee has hampered our growth potential by undermining the competitiveness and the profitability rates of our industries, particularly businesses facing global competition. This unfavorable rupee dynamics has cropped up just after the global economic crisis whichhasvery seriously affectedthese companies. Third, the activity levels were affected by moderate growth in household consumption and private investment due to a decreasing confidence amongst our economic agents.

Sectorwise, developments were uneven. In 2009 the sectors the most exposed to external environment were more severely hit by the global economic recession whereas domestic market-oriented ones had shown some resilience. The slowdown of the national expansion was mostly driven by the low growth rates of the tertiary sector, the most important contributor to economic growth, and to a lesser extent the secondary segment. As for the primary sector, an excellent expansion rate was registered which has helped to maintain a good economic growth in the crisis year.

For 2010, the performance of the secondary and the tertiary sector have improved due to the global economic recovery. These two sectors have witnessed higher growth rates, respectively 3.3 percent and 4.8 percent compared to the 2009 figures of 3 percent and 2.8 percent. However, it should be noted that the primary sector has declined by 1.5 percent in 2010 after a comfortable growth of 8.6 percent in 2009.