Mauritius has demonstrated impressive resilience in the face of recent global challenges. In 2024, the economy expanded by 4.7 percent, underpinned by strong performances in tourism, financial and business services, and construction. Inflation—once a key concern—has been brought under control, and foreign reserves remain solid. At first glance, the country’s economic outlook appears positive. Yet beneath this surface strength lies a more complex reality. Structural weaknesses, external vulnerabilities, and mounting global uncertainties point to the need for bold, coordinated, and immediate policy action. In this context, Blue Azurite lays out what foreign investors need to understand about the risks and opportunities shaping Mauritius today.
An IMF mission, led by Mariana Colacelli, recently concluded its 2025 Article IV Consultation with Mauritius. Its findings paint a portrait of an economy at a crossroads: outwardly stable, but increasingly vulnerable to structural fragilities, policy inertia, and external shocks. The message is clear—now is the time to recalibrate.
Slowing momentum in 2025
Though 2024’s economic performance was laudable, the momentum will be harder to sustain. The IMF projects growth to slow to 3.0 percent in 2025, owing to weakening global demand, tapering tourism activity, and a severe drought impacting agriculture and infrastructure.
This softening does not spell crisis, but it signals the end of the post-pandemic bounce. It also raises questions about Mauritius’ medium-term growth engine—one still reliant on external demand and vulnerable to climate volatility.
Inflation Is falling, but monetary policy must stay credible
The Bank of Mauritius (BOM) has delivered a soft landing on inflation. After hitting 7 percent in 2023, inflation declined to 3.6 percent in 2024 and fell further to 2.5 percent by March 2025. This improvement reflects a mix of global disinflation, especially in food and energy, and targeted domestic measures, including a cut in fuel excise duties.
But success brings its own risks. With price pressures easing, the political and institutional drive to uphold a vigilant, rules-based monetary regime could weaken. The IMF has rightly called for the BOM to reinforce its policy framework and safeguard its operational independence.
Looking ahead, the central bank must be ready to act decisively if inflation reemerges. A delayed or hesitant response would risk undermining the credibility it has worked hard to earn.
Shrinking fiscal space, rising debt
Mauritius continues to pursue an expansionary fiscal path. The primary deficit is projected to widen to 6.6 percent of GDP in FY 2024/25 (excluding grants), while public debt is set to reach nearly 90 percent of GDP by June 2025. These trends point to growing fiscal fragility.
The IMF’s message is clear: a credible, medium-term fiscal consolidation strategy must begin in FY 2025/26. This means higher tax revenues, tighter control of current spending, and stronger fiscal governance. Crucially, reforms must be designed to protect vulnerable populations while restoring macroeconomic stability.
The path to fiscal sustainability will be politically difficult, but economically unavoidable. Delaying reform would only deepen fiscal imbalances and raise the long-term cost of correction.
External buffers are strong, but structural imbalances remain
Mauritius’ foreign reserves rose to $8.4 billion in 2024—even as the current account deficit widened. These reserves provide an important buffer against external shocks. But buffers, while reassuring, are not a substitute for structural balance.
Persistent external imbalances continue to weigh on the economy. A downturn in global growth, renewed trade uncertainty, or financial market volatility could quickly test Mauritius’ resilience.
As the IMF underscores, improving external competitiveness is essential. This requires addressing long-standing inefficiencies in trade logistics, labor market flexibility, and investment incentives. It also calls for a clearer strategic positioning in a rapidly evolving global trade and financial landscape.
Financial sector: Vigilance needed to safeguard stability
Mauritius continues to hold its ground as a trusted International Financial Center. However, that status is not without risks. The IMF has called for sustained and proactive oversight of macro-financial vulnerabilities—especially those tied to global business companies (GBCs) and the real estate sector.
Equally important is the Bank of Mauritius’ gradual withdrawal from the Mauritius Investment Corporation, a key intervention during the COVID-19 crisis. This exit must be carefully sequenced to avoid market disruption or unintended liquidity strains.
As financial sector reforms advance, stability must remain the guiding principle. A steady, transparent approach is essential to preserving confidence and ensuring long-term resilience.
Climate and competitiveness: The dual imperatives
Macroeconomic management alone won’t secure Mauritius’ future. The most lasting gains will come from structural reforms aimed at transforming the economy’s foundations. Key priorities must include:
- Enhancing climate resilience: As a small island state, Mauritius is acutely vulnerable to climate shocks. Investments in adaptation, infrastructure, and risk mitigation are essential.
- Expanding labor supply and upskilling: Addressing demographic pressures and skills mismatches is critical to raising productivity and supporting long-term growth.
- Strengthening AML/CFT compliance: Sustained attention to financial integrity remains vital for safeguarding the country’s status as a credible financial jurisdiction.
- Fostering private-sector–led growth: Unlocking investment, reducing regulatory barriers, and improving the business climate are key to driving innovation and job creation.
These imperatives are deeply interconnected. A more competitive and climate-resilient Mauritius will not only help reduce external vulnerabilities—it will lay the groundwork for a more inclusive, durable, and sustainable growth model. That, more than any single policy lever, will shape the island’s economic trajectory.
Investing in Mauritius: Opportunity amid complexity
Mauritius remains an attractive destination for foreign investors—but success requires a nuanced understanding of evolving conditions. The macroeconomic environment offers reassuring strengths, yet emerging headwinds and structural challenges call for careful navigation.
What’s working for investors
- Macroeconomic stability: Inflation has been brought under control, foreign reserves are growing, and the country continues to enjoy a reputation as a regional safe haven.
- Reform momentum: The government maintains a reform-oriented posture, with ongoing efforts to streamline regulation, improve fiscal governance, and enhance competitiveness.
- Sectoral opportunities: Investment interest is strong in green infrastructure, digital services, tourism, and fintech—areas aligned with both national priorities and global demand trends.
What requires caution
- Slowing growth in 2025: Economic momentum is easing, raising concerns about domestic demand, sector-specific resilience, and the pace of private investment.
- High public debt and fiscal adjustment risks: While fiscal consolidation is necessary, poorly sequenced reforms could constrain consumption and stall investor sentiment.
- Regulatory tightening: The IMF’s call for stronger oversight—especially in financial services and real estate—suggests a more compliance-heavy environment ahead.
- Political uncertainty: Structural reforms may face implementation risks, particularly in the context of pre-election dynamics and policy hesitancy.
The bottom line
Mauritius remains a strategically located, financially sophisticated economy with clear long-term potential for investors. But success requires more than timing—it demands patience, due diligence, and close attention to policy signals.
Investors in local bonds, real estate, or financial services should closely monitor macroeconomic shifts and the trajectory of fiscal consolidation. At the same time, sector-focused investors—particularly in climate finance, agri-tech, and digital services—will find promising entry points, provided that ongoing reforms move from policy to practice.
In this evolving environment, Blue Azurite offers on-the-ground expertise to help foreign investors navigate complexity with confidence. Based in Mauritius, the firm provides tailored support—from regulatory guidance and sectoral analysis to partnership facilitation. As reforms unfold and risks shift, trusted local insight can mean the difference between seizing opportunity and missing it.
