Chandra Watkins

Real economic growth in Mauritius slowed to an estimated 3.7 percent in 1989-90, down from 5.5 percent the previous year and an average of 9 percent in 1985-88. Real gross domestic product is projected to grow by about 6.4 percent in 1990-91 as sugar rebounds strongly reflecting improved weather conditions this year. A negative growth rate for the third successive year in the sugar sector largely accounts for the slower pace of growth in 1989-90, although there was also some decline in the rate of growth in the tourism and export manufacturing sectors, the two dynamic components in Mauritius' sustained economic takeoff during the 1980s.

The rapid growth of Mauritius' widely-copied Export Processing Zone (EPZ), in particular since the mid-1980s, has made it the major factor in the island's economy. The EPZ accounts for more than 60 percent of total exports, 30 percent of total employment, and 85 percent of total foreign direct investment. The number of EPZ firms fell from a peak of 591 in 1988 to 563 in 1989. The net decline resulted from the closing of 46 textile firms and the creation of 18 new companies in other sectors. The non-textile sector still accounts for only about 10 percent of total EPZ employment.

The creation of a Mauritius Stock Exchange in July 1989 should facilitate the flow of capital toward productive investment in new industries. Service-oriented export industries such as offshore banking are beginning to attract foreign investment to Mauritius. The offshore banks are precluded from direct transactions with local residents but are entitled to make foreign currency loans and to offer interest-bearing foreign currency accounts to EPZ firms. Mauritius' exchange system is now free of controls on current international transactions.

Mauritian exports to the United States consist mainly of clothing, sugar and molasses, canned tuna, optical goods, processed diamonds and semi-precious stones, and other simple manufactures. Garments and sugar are subject to U.S. quotas.

The principal import items from the United States include rice, wheat flour, navigational instruments, computers, tractors, generators, air conditioners, and chemicals and fertilizers.

There are good prospects for sales of raw materials, machinery, and spare parts to EPZ firms. Total EPZ imports amounted to $400 million in 1989. The principal EPZ imports are textile yam and fabric; wool; sewing, knitting, and spinning machinery; and dyestuffs. Other U.S. export prospects include telecommunications equipment and services, computers and other automated office equipment, agricultural and other agroindustry machinery and equipment, wheat, and road and building construction machinery and equipment.

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