Mauritius is losing its lustre as inertia and complacency set in

Once the darling of development economists because of its strategic reinvention, the island country is now neither navigating global headwinds successfully nor tackling rising internal risks.

- By Ronak Gopaldas

Mauritius has long punched above its weight economically. From sugar-cane and textiles to tourism and financial services, the country has reinvent-ed itself multiple times. It is a small island that turned its geographic isolation into an opportunity rather than a constraint.

But today, as global headwinds intensify and domestic vulnerabilities become harder to ignore, many wonder whether Mauritius has become complacent, banking on past glory rather than investing in the future.

Recent developments paint a bleak picture. The country has experienced a significant budgetary slippage, increased public debt, subpar economic growth and growing questions about governance standards.

The recent sovereign rating change by Moody's from stable to negative (while maintaining the investment grade BAA3 rating) underscores what many investors and observers have been contemplating for some time: is the Mauritian miracle running on fumes?

The country’s success story has been underpinned by its reputation for sound macroeconomic management and technocratic competence. In previous decades, its leaders navigated choppy waters with strategic reinvention. From trade liberalisation to sector diversification, Mauritius’s response was proactive and agile.

But this time, the state’s response has felt unsteady. Despite lofty expectations, policy inertia under the new government has taken root, further eroding business sentiment.

Four major risks

Mauritius must now contend with four major risks. First, the flagging tourism sector. Once a jewel in the country’s economic crown, tourist arrivals are under pressure.