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Designed to Perform

MAURITIUS (-/Baa1/- *) Country Risk Assessment - Mauritius . KEY DEVELOPMENTS Bank of Mauritius (BOM) is expected to keep its key policy rate of 3.50% throughout 2019, given the subdued inflation currently sitting at 0.5% y/y in Jan 2019 Over the long term, Mauritius' development as a transshipment and finance hub on China's Maritime Silk Road - to be secured by a free trade agreement by early 2019 - will help boost economic growth. Political stability undermined by persistent revelations of corruption, illegal activity or misconduct from leading political figures which could prompt early elections in 2019. As at 31 Dec, tourist arrivals have grown by 4.3 y/y • • • • KEY STRENGTHS Mauritius has had historically a stable political environment Judicial system is regarded as independent Diversified economy; manufacturing and tourism expected to benefit from growth in Asia Good record of attracting investment and business friendly environment Prudent external debt-management and strong payments record. Ample liquidity available in the domestic capital market Double Taxation Avoidance Agreements (DTAAs) and Investment Promotion and Protection Agreements (IPPAs) with many African countries Mauritius is moving towards being a transshipment and financial hub for Sino-African trade, which represents opportunities for Mauritius' long term growth trajectory The country also aims to become a leading tax free shopping destination, auguring for an expansion in the tourism and retail sectors. KEY RISKS The country is also exposed to external shocks through the economy's openness, high dependence on food and fuel import costs, and excessive reliance on volatile export revenues from tourism, sugar and textiles UK and EU growth impacts on Mauritian economy. Should growth lower in those regions, Mauritius is also affected. Increase in external debt and public contingent liabilities Mauritius is particularly prone to imported inflation from high oil and food prices. Both carry a substantial weighting in the CPI basket. "Changes to Mauritius' tax treaty with India and its participation in the 'Convention on Mutual Administrative Assistance in Tax Matters' will weigh on the country's financial sector." Sector Focus: Hospitality ☐ Tourism is the third pillar of the economy and has shown resilience and steady growth in the last few years From 656,450 tourist arrivals in 2000, the country now welcomes c. 1.4m tourists each year Traditional markets such as the EU (+5.6%) has seen sustained growth, while targeted growth markets including China and India are seeing stabilized arrivals Sector focus: Education Growing number of expats on the island and rising middle income have contributed to increased demand for high end school, with international standards The supply in this particular niche has historically been limited given free schooling offered by the State but is now catching up. Tourism Statistics Tourist arrivals Growth of "Accomodation and Food Sevices Activities" sector (%) Tourist arrivals increase over previous year (%) Gross earnings from Tourism (Rs. Mn) Gross earnings per tourist (Rs.) I 13 Source: statsmauritius.govmu.org 2014 1,038,334 2015 Tourism Statistics 2016 2017 1,151,252 1,275,227 1,341,860 2018 1,399,287 6 5 9 11 9 11 5 5 4 4 44,304 50,191 55,867 60,262 64,000 42,668 43.597 43,809 44,909 45,878 Mauritius SSSS grit
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