Mauritius largest bank warns of historical trade deficit of 30% of GDP

While Mauritius has a very limited economic exposure to Russia and Ukraine, the global fallout of the ongoing conflict is inevitably going to have notable indirect effects onto the domestic economy.

Such is the opinion of Gilbert Gnany, Chief Strategy Officer at the Mauritius Commercial Bank (MCB).

In the 87th MCB Focus released on Friday evening, Gnany said a precise and thorough assessment of the toll on nationwide activity levels is quite complex at this stage given the uncertainty over the duration and magnitude of the war.

“However, there are already visible signs that the sharp rise in input costs resulting from the jump in commodity and energy prices and disrupted supply chains would, coupled with the downward revisions in our main trading partners, weigh on the strength of the recovery being witnessed locally.”

Gnany said the higher price and cost pressures are set to constrain domestic consumption and restrain the anticipated rise in nationwide investment.

This would exacerbate the level of visible trade deficit “which would, this year, exceed 30% of GDP for the first time in the country’s history.”

As a result, MCB analysts have revised their growth forecast for 2022 from 6.7% (January) to 6.2%.

The MCB forecasts inflation of around 7.7% in June 2022.