COVID-19Weekly Economic Watch

22nd May 2020

2

Introduction

Highlights

• The COVID-19 pandemic has continued to spread around the world during the week, but some stabilisation in case growth in several countries is allowing the gradualeasing of restrictions to proceed. Against this backdrop, some airline companies have announced plans to resume flights under strict sanitary conditions.

• On the economic front, latest data and observations during the week have shone more light on the exceptionally challenging nature of the global economic context.

• Global stocks pushed higher during the week, aided mainly by early results from a COVID-19 vaccine trial and prospects of Central Banks offering further measures tostimulate economic growth and protect incomes. Elsewhere, oil prices rose further, with Brent oil hitting a two-months high, supported by the gradual pickup indemand and ongoing supply cuts.

• As for Africa, the virus seems to be spreading more slowly than initially thought, while in some countries, elections are set to take place in spite of the pandemic.

• In Mauritius, a progressive reopening of the economy began at the end of last week amidst a persistently challenging backdrop as evidenced by latest data releases.

This is the sixth edition of our weekly economic watch, issued in the context of economic and financial developments arising in the midst of the ongoing COVID-19 pandemic. The views

expressed in the document are based on our current assessment of the situation. Readers are, however, advised to take cognizance of the highly dynamic nature of the operating landscape,

which may, therefore, cause opinions and forecasts to evolve rapidly over time.

COVID-19 continues to spread around the world, but to varying degrees

Diverging trends in COVID-19 cases across regions

• As of mid-May, over 5 million positive cases of COVID-19 have been recorded across over 200 countries worldwide.More than 320,000 people have lost their lives and nearly 2 million have recovered from the virus.

• In some countries, notably in Europe, signs of relative stabilisation are being witnessed in the number of infectionsand have paved the way for a gradual easing of lockdown measures. For instance, the daily death toll remainedbelow 100 for a third consecutive day in Spain while the spread has slowed, data on Tuesday showed. In otherregions, however, a flattening of the curve is yet to be observed. Illustratively, a sharp increase in cases in LatinAmerica has led the World Health Organization (WHO) to say that the Americas are currently at the centre of thepandemic. Brazil is now the world’s fastest-growing coronavirus hotspot. The country has overtaken the UK as thethird country with the most cases globally. On an encouraging note, in the US, which has the highest number ofcases worldwide, less than 2% of the active cases are in serious critical conditions.

Positive early results in vaccine trial

• As reported in the press, all volunteers who received Moderna Inc’s COVID-19 vaccine developed antibodies to thevirus, according to the biotech company. If future testing phases go well, the company's vaccine could be availableto the public as early as January. The Moderna vaccine is one of more than 100 vaccines currently underdevelopment to protect against the novel coronavirus, as stressed by the World Economic Forum.

Worst-hit European countries have passed through their peak…

… while other countries become new hotspots

No

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eath

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er d

ay

The

Rnumber

• The R number has gained widespread attention since the onset of the COVID-19 pandemic. R actuallyrefers to the effective reproduction number. It measures an infectious disease’s capacity to spread.The R number denotes the average number of people that one infected person will pass the virus to.An R number above 1 indicates that the virus is spreading exponentially. Values of R have been widelycompared across countries to gauge the spread of the virus. In recent weeks, the attention hasshifted to the comparisons of R values across regions in a country. The difference in R number can beexplained by the timing of the initial wave of infection which was very different in each region. Forexample, in the UK, there is a big contrast between the South West (R=0.7) and London (R=0.4).Furthermore, following the easing of lockdown measures, R rose in some areas in Germany.

Source: BBC

4

With the gradual easing of lockdowns, some airline companies are announcing a steady resumption of flights

Lufthansa: The German Carrier, plans to resume flights to destinations including Los Angeles, Toronto, Dubai and Mumbai next month as it begins to restore some of the capacity grounded by thecoronavirus crisis. Group airlines that had brought operations to a near halt will operate about 1,800 weekly flights to 130 destinations by the end of June, Lufthansa said in a statement. It will restoreservices from Frankfurt and Munich as it returns to European destinations as well as 13 intercontinental routes. Travellers on all Lufthansa flights will need to wear face masks and should expect strictersecurity and hygiene regulations. Passengers should also check entry and quarantine regulations of the countries they are flying to before booking any travel.

Air India: The Government is expected to announce shortly when to resume flight operations. To this end, the Ministry of Civil Aviation has already reached out to various stakeholders includingairlines, airports and ground-handling firms to begin laying the ground for restarting flights. A number of new rules and regulations would be put in place, including mandatory social distancing atairports, revisions in the way security procedures are conducted, use of face masks and personal protective equipment by passengers and employees, among others.

Ryanair: The Irish airline indicated last week that it will return to 40% of its planned flight schedule from July 1. The airline will require passengers to wear face coverings and ask crew permission touse the toilet. As part of its COVID-19 response, Ryanair will also require all passengers to fill out a form detailing the length of their planned visit and where they will stay, information that will beprovided to EU Governments to monitor quarantine measures.

Brussels Airlines: Brussels Airlines indicated that it will resume flights on June 15, starting with Germany, Switzerland, Spain, Portugal and Greece. After seven weeks of hibernation mode, routeswill be phased in, in line with passenger demand and travel restrictions.

Emirates: Emirates has announced plan to operate scheduled flight services from 21 May to 30 June to nine destinations: London Heathrow, Frankfurt, Paris, Milan, Madrid, Chicago, Toronto, Sydneyand Melbourne. The airline will also offer connections in Dubai for customers travelling between the UK and Australia. Travellers will only be accepted if they comply with the eligibility and entry criteriarequirements of their destination countries. In preparation for the resumption of flight services, the airline has already enhanced various precautionary measures throughout the customer journey. AtDubai International airport, customers and employees will have their temperatures checked via thermal scanners. Protective barriers have been installed at check-in counters to provide additional safetyduring interaction. Gloves and masks are mandatory for all customers and employees at the airport. Social distancing protocols will also be implemented.

Air France: The French airline company prepares to restore flights to dozens of destinations that had been suspended under lockdown measures. The carrier plans to increase capacity to about 10%of normal levels by mid-June, from 3-5% today (It is currently operating 200-300 weekly flights on 43 routes). As such, by mid-June Air France would have restored about 600 flights per week to 110destinations, travel restrictions permitting - still far short of its usual weekly tally of more than 7,000 services to 196 destinations. Of note, Air France had previously announced its plans to resume mostof its flights to Africa from July 3, with flights to Mauritius starting as early as June 15 2020.

Alitalia: The Italian airline announced that it will resume domestic service as from this week with flights between Rome and other regions like Alghero and Olbia.

Air Mauritius: The airline announced that all its international commercial passenger flights will remain suspended until 30 June 2020. Commercial flights are scheduled to resume on the 1st of Julysubject to all conditions, including opening of borders and lifting of travel restrictions, being met, as stressed in a communiqué released by the airline company.

5

Yet, on the economic front, enduring fragilities continue to surface …

In her latest statement made during the week, the Managing Director of the IMF, Kristalina Georgieva, stressed that a full global economic recovery is unlikely in 2021, and thatthe world economy would take much longer to heal completely from the shock caused by the COVID-19 pandemic than initially expected. This is corroborated by the WorldEconomic Forum's COVID-19 Risks Outlook report which indicates that the risk of a prolonged recession of the global economy as the top concern for business.

US-China tensions escalate

• US has increased the pressure on Huawei by tightening export controls on the Chinese telecoms group and its suppliers, heightening tensions with Beijing that have flared during thepandemic. President Trump’s last week threat to “cut off the whole relationship” with China in the midst of the pandemic suggested a possible move to unravel the trade truce reachedbetween the two economic powers in January of this year. The Chinese foreign ministry responded by urging the US “to abandon its cold war and zero-sum mentality.”

Retail sales and factory output plunge in the US

• US retail sales and factory output registered the steepest declines on record in April, illustrating a recession so deep that it could take years to fully recover according to press articles.Revenue at retailers and restaurants fell by 16.4% from the prior month, almost double the drop observed in March according to official data by the Government Department released at theend of the last week. A separate report from the Federal Reserve showed that industrial production had decreased by 11.2% in April.

Brexit talks stall

• Negotiations between the UK and the EU on their post-Brexit future relationship have become deadlocked, prompting calls for both sides to change approach ahead of a crucial summit inJune. At the end of the third round of talks between Brussels and the UK, David Frost, Britain’s chief Brexit negotiator, said discussions had stalled because of disagreements over the EU’sdemands on the so-called level playing field. The bleak assessment was shared by his EU counterpart Michel Barnier who said the two sides risked reaching a ‘stalemate’.

Japan GDP & PMI data for May

• Japan has fallen into a technical recession for the first time since 2015 with an annualised economic contraction of 3.4% in the first quarter of the year, following a contraction of 7.3% in thelast quarter of 2019. The Japanese economy suffered a further substantial fall in business activity during May, according to the latest flash PMI results.

• Elsewhere, the flash IHS Markit Eurozone Composite PMI rose from an all-time low of 13.6 in April to 30.5 in May. This means that fewer companies indicated declining output, but that thecontraction in business activity continued nevertheless. Of note, PMI readings below 50 indicate a contraction in activity.

… while the crisis provides an opportunity for a green recovery

• As per a recent report by the International Energy Agency, the COVID-19 pandemic is expected to cause global energy emissions to fall by a record 8% this year due to theunprecedented drop in demand for coal, oil and gas in the wake of containment measures. The fall, however, may prove to be as short-lived as was the emissions decline observed afterthe 2008 financial crisis, if policymakers preserve the status quo and continue to rely extensively on fossil fuels to revive their stricken economies. Governments, therefore, have achance today to launch new policies to promote a green economic recovery. Notably, massive programmes of green public investment would be the most cost-effective way both torevive virus-hit economies and strike a decisive blow against climate change. Such green incentives could include green bonds and other forms of sustainable finance. The IMF estimatesthat a low-carbon transition would require USD 2.3 trillion in investment every year for a decade and that large emitting countries should introduce a carbon tax rising to USD 75 a tonby 2030 to keep global warming under 2 degrees Celsius. A growing number of business and industry leaders are now calling for the European Green Deal to be used as a framework fortackling short-term economic needs with long-term sustainability goals. The following figure illustrates a comprehensive framework developed by the European Commission.

European Green Deal

A zero pollution Europe

Transition to a circular economy

Farm to fork

Towards green CAP

Take everyone along (Just Transition Mechanism)

Financing the transition

Achieving climate neutrality

Clean, reliable and affordable energy

Preserving Europe’s natural capital

Sustainable transport

Source: European Commission

Notes:(i) The ‘Farm to Fork’ strategy reflects the

goal of making Europe's food system thegold standard for sustainability byfostering a fair, healthy andenvironmentally-friendly system

(ii) ‘CAP’ is the Common Agricultural Policyapplicable to all EU countries

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Key highlights during the week

• After last week’s generally risk averse mood, investor sentiment improved during the week, aided byencouraging early results from a COVID-19 vaccine trial, a further easing of restrictions in some countries andthe prospect of Central Banks offering further measures to stimulate economic growth and protect incomes.

• At another level, the total of the US FED’s bond-buying in just a handful of weeks to support the economy is inline with what it had purchased during the nearly three-year period covering its second and third rounds ofquantitative easing after the financial crisis. That said, the magnitude of the FED’s action has reportedlydistorted credit spreads in bond markets and impacted the ‘signaling effect’ that the market uses in normaltimes to gauge the health of the economy and the likely evolution of inflation.

Sources: Bloomberg, US Treasury, Financial Times & JP Morgan

On another note, a more positive mood has been observed in markets this week

Investors struggle to hear signals from bond markets

• When the FED stepped in to support theworld’s largest debt market in March, fixedincome investors were relieved. But, insuccessfully staving off a more pronouncedfinancial crisis, the FED has, in the process,distorted markets and overwhelmed the once-reliable signals that bonds used to give aboutthe path of the economy and inflation.

• Treasury yields have touched fresh lows sinceMarch, as bond prices have risen. As perMorgan Stanley Investment Management,“the more you interfere with markets, the lesssignalling you will get”.

As at 20 May 2020w.o.w

changey.t.d

change

MSCI World 2,092.0 4.7% -11.3%

S&P 500 2,971.6 5.4% -8.0%

Dow Jones 24,575.9 5.7% -13.9%

Nasdaq 9,375.8 5.8% 4.5%

FTSE 100 6,067.2 2.8% -19.6%

CAC 40 4,497.0 3.5% -24.8%

DAX 11,223.7 6.5% -15.3%

Nikkei 20,595.2 1.6% -12.9%

10-year US Treasury yield

0.68% 0.03 pp -1.2 pp

US

Europe

Asia

Stocks

Bonds

8

… with prices of selected commodities also picking up

Sources: Coindesk, Reuters, Investing.com & Financial Times

Commodity prices

Bitcoin

• Bitcoin - the largest cryptocurrency by market capitalisation - is currently hovering above theUSD 9,000 mark, and is, as at 20 May, up by 32% year to date. In fact, while volatility levelsremain elevated, the cryptocurrency has almost recovered from the lows of March 2020following the coronavirus-triggered asset sell off.

• Bitcoin nearly topped USD 10,000 in May during trading but has not reached such heightssince, though traders are eagerly awaiting a return to five digits because this would signalpositive momentum.

• Brent oil prices jumped to a two-months high of USD 35 a barrel during the week, supported bygrowing signs of a rebound in demand amidst a further easing of lockdowns worldwide, ongoingsupply cuts and a drawdown on US crude inventory. Prices for oil cargoes from Russia and Brazilsurged while Indian fuel sales jumped in the first half of May and Chinese fuel consumption hasnearly returned to pre-pandemic levels. However, weak refining margins and comments from USFED Chair about the risks to the US economic recovery impacted prices to a certain extent.

• Metals prices were upheld by market expectations that the Government in China - the world’sbiggest metals consumer - could announce more stimulus measures. Going forward, metalscould see a rebound as they did after the financial crisis of 2008-09, given the potential forconsumers to invest their savings on durable goods, such as cars or home improvements, andreal estate, though it may take some months before gauging how consumer spending develops.Furthermore, initial recovery signals from China are positive, pointing to a rebound in domesticcommodity demand.

Brent oil and copper futures

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Brent futures Copper futures (RHS)

9

Africa election watch

In Africa, the virus seems to be spreading more slowly than initially thought and is not preventing the conduct of elections

Africa is home to 17% of the world

population and has reported < 2%of positive COVID-19 cases

Why COVID-19 seems to spread more slowly in Africa …

Since the first positive case was detected, a significantly bleak scenario was envisaged for the African continentgiven its crowded slums and relatively weak health systems. Yet, more than two months on, Africa’s handling ofthe pandemic sends a hopeful message. Whilst it is too early to breathe a sigh of relief given low testing andpossible undercounting, there are pointers which could affirm the relatively low infection rate in Africa.

• While the situation still warrantsattention in South Africa and Egypt,some countries such as Mauritius,Namibia and Seychelles have notreported a new positive case for overtwo weeks.

• Ethiopia, Rwanda and Uganda havefewer than 700 cases between themand positive-test rates below 1%.

By the end of April, at least 42 African countrieshad done so. 38 of these were in place for at least21 days.

One way to judge whether coronavirus deaths mightbe under-reported is to search overall fatality statisticsfor deaths in excess of normal levels.

In South Africa, deaths remain generally withinthe bounds of expectation, as per its MedicalResearch Council (nearly half of positive COVID-19cases have already recovered).

The slower spread of airborne infection could stemfrom Africa’s unique socio-ecological context.

Compared to other nations, Africans travel less,

given its inherent sparse road networks.

Swift introduction of containment measures was notedwith most African countries having implementedlockdowns far earlier than rich countries did.

Sources: The Economist & Financial Times

• National elections, including presidential andparliamentary, as well as local elections, are scheduledfor the second half of 2020 and the first half of 2021 inseveral African countries. In spite of the COVID-19pandemic, a number of these elections are expected tobe held. In Mali, for instance, parliamentary electionswere held on March 29.

In March, Alpha Condé, Guinea’s President, has movedforward with a highly controversial referendum onconstitutional reform allowing him to seek for anotherterm in office. His party won over two-thirds of theseats in legislative elections held on the same day.

Similarly, Burundians are set to crowd into pollingstations on May 20 to choose a new President andparliament.

Malawi’s supreme court ruled unanimously infavour of carrying out fresh presidential elections on2 July.

Tanzania’s President is likely to press ahead with an election in October.

Benin staged local elections on May 17th withauthorities pushing ahead despite the coronavirusthreat and calls for a delay.

10

The progressive reopening of the Mauritian economy began against the backdrop of challenging conditions …

The implementation of the first phase in easing the lockdown began at the end of the previous week with some economic sectors resuming and increasing business activities.Furthermore, the COVID-19 Act and the Quarantine Act were adopted and the Budget Day was announced for June 4 in the National Assembly. At another level, latest datareleased by Statistics Mauritius and figures reported by the Minister of Finance at the National Assembly shed light on the early impact of the pandemic on the external front.

Fall in exports of goods during the first quarter of the year, when compared with the corresponding period in 201938%

Fall in tourist arrivals during the period January – April 2020, with a 100% drop in arrivals for April in year-on-year terms34%

Decline in gross tourism earnings during the first quarter of the year, when compared with the same period in 201914%

Drop in gross direct investment flows in Mauritius recorded during the first quarter of the year40%

The Minister of Finance indicated that, as per preliminary forecasts by the Bank of Mauritius, the country’s current account deficit will deteriorate to

stand at around 11% to 15% of GDP in 2020 while reserves would fall by around USD 1 billion.

11

… while banks are being impacted by the difficult context amidst increasing support from the Bank of Mauritius

• All economic operators, SMEs, households and individuals, who have availed themselves of moratorium facilities on loans granted by banks or who have been financially impacted by COVID-19,will not be penalised as regard the information reported at the level of the Mauritius Credit Information Bureau.

• The Guideline on Standardised Approach to Credit Risk and the Guideline on the Computation of Debt-to-Income Ratio for Residential Property Loans have been reviewed. With regard to thephase-in arrangements set by the Bank of Mauritius for determining the regulatory capital requirements for banks, the implementation of the last tranche of the Capital Conservation Bufferamounting to 0.625% has been deferred to 1 January 2021 (as compared to 1 January 2020 previously). Overall, the declared aim of the afore-mentioned measures is to help release more capitalto banks whilst also giving them more flexibility in terms of funding capacity and support they can provide to customers.

• The Bank of Mauritius has set up the Mauritius Investment Corporation Ltd (MIC) as a Special Purpose Vehicle under its aegis with the objective to provide support through a range ofequity/quasi-equity instruments in view of ensuring that domestic systemic economic operators are kept afloat during these challenging times and that jobs are preserved. Furthermore, onaccount of the negative impact of COVID-19 on the Mauritian economy, the Board of Directors of the Bank of Mauritius has decided to provide Government with a one-off exceptionalcontribution of Rs 60 billion, for the purpose of assisting the Government in its fiscal measures to stabilise the economy of Mauritius.

Sources: Published financial statements of respective banks & Bank of Mauritius

• Net impairment of financial assets rose by Rs 1,510 million relative to Q1 2019 to stand at Rs 1,792 million for the first three months of 2020.• The bank noting the following: The increase in ECL reflects the inherent increase in credit risks and MCB’s forward looking view of the impact of the COVID-19

pandemic on its operations, based on certain assumptions made in the bank’s credit modelling exercise amidst significant uncertainties on how future developmentswill unfold not only locally but also in its major markets.

Maubank Ltd

ABC Banking Corporation Ltd

Bank One Ltd

MCB Ltd

• Net impairment loss on financial assets rising by Rs 344 million to Rs 352 million.• The bank noting the following: The increase in the overall credit risk has been factored into Bank One’s Q1 results and the resulting rise in provisioning levels.

• Allowance for credit impairment rising by Rs 110 million to stand at Rs 113 million.• The bank noting the following: For the quarter under review, the bank took a provision for impairment of Rs 113 million due an increase in specific provisions linked to

exposures being non-performing assets and also due to an increase in general provisions linked to the increased credit risk in sectors affected by COVID-19.

• As reported, the bank has, with regard to the impact of COVID-19, recorded fair value losses of around Rs 93 million as disclosed in the statement of othercomprehensive income, mainly attributed to a significant drop in prices of foreign securities during the month of March 2020.

Zoom on the evolution of specific metrics of banks in Q1 2020

Further support measures recently announced by the Bank of Mauritius

Sources: Statistics Mauritius, Bank of Mauritius, MCB Staff estimates, Nasdaq & Reuters

The rupee has been broadly stable in effective terms lately, while excess MUR liquidity in the banking system is on the rise

12

Note: An increase/decrease in the above index corresponds to a depreciation/appreciation of the Mauritian rupee

• The US dollar lost grounds vis-à-vis the euro at the beginning of theweek following the proposal made by Germany and France to create aEU recovery fund of around EUR 500 billion. The greenback hasrecovered during the past few days, however, on expectation thatongoing China-US tensions and weak economic indicators in Europecould dent market sentiment. The greenback was also supported byfurther stimulus promise from the FED.

• The Sterling has weakened during the week after Britain and theEuropean Union exchanged threats over a post-Brexit trade deal, whilelatest PMI data indicating a further contraction in activity in May alsoweighed on the currency.

• South Africa’s rand gained early this week as demand for emergingmarket currencies was boosted by further easing of lockdownregulations globally, while a rally in gold prices also helpedcommodity-linked currencies.

Currency movements on international markets during the week

MUR v/s main currencies

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Evolution of MUR against main currencies

USD GBP EURO

Mid-rate

21-May-20 w.o.w m.o.m y.o.y y.t.d

MUR % % % %

USD 39.83 (0.4) 0.2 12.5 9.4

Euro 43.60 1.0 1.3 10.7 7.4

GBP 48.53 (0.5) (1.5) 8.1 1.7

(Appreciation)/Depreciation of the rupee

• The Bank of Mauritius has halted the issuance of its own securities inrecent weeks. Against this backdrop and as per latest available data,the excess cash holdings of commercial banks in MUR (above therequired minimum balances) stood at Rs 29.5 billion as at 7 May 2020.

Update on the money market

The Bank of Mauritiussold USD 20 million onthe forex market on the15th May, while alsointervening on 21st May.

SEMDEX rose marginally in spite of the net foreign divestment noted during the week

Evolution of the SEMDEX Performance by companies (year to date)

1,400.00

1,600.00

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2,400.00

SEM

DEX

-p

oin

ts

Ceased trading

Banking & Insurance

MCB Group Limited -29%

SBM Holdings Ltd -37%

Eagle Insurance Ltd +2%

MUA Ltd +8%

CIM Financial Services Ltd -22%

Swan General Ltd -19%

Commerce

Harel Mallac Ltd -13%

Innodis Ltd +12%

Ireland Blyth Ltd -15%

Vivo Energy Mauritius Ltd -3%

Industry

Gamma Civic Ltd -26%

Go Life International Ltd 0%

Phoenix Beverages Ltd +3%

Mauritius Chemical & Fertilizer Industry Ltd

-6%

Mauritius Oil Refineries Ltd -13%

Plastic Industry (Mauritius) Ltd -10%

United Basalt Products Ltd -24%

Investments

Alteo Ltd -15%

Belle Mare Holding Ltd -22%

Caudan Development Ltd -10%

CIEL Limited -38%

ENL Limited -32%

Fincorp Investment Ltd -33%

The Mauritius Development Investment Trust Co. Ltd

-34%

Medine Ltd -27%

National Investment Trust Ltd -17%

Promotion and Development Ltd -25%

P. O. L. I. C. Y Ltd -10%

Rogers & Co. Ltd -41%

Terra Mauricia Ltd -2%

United Docks Ltd -22%

Leisure & Hotels

New Mauritius Hotels Ltd -65%

Lux Island Resorts Ltd -59%

Sun Limited -50%

Automatic Systems Ltd -15%

Lottotech Ltd -7%

Property development

BlueLife Limited -40%

Sugar

Omnicane Ltd -39%

Transport

Air Mauritius Ltd (as at 22 April 2020)* -29%

* Suspension until further notice of dealings in securities of Air Mauritius Limited, with effect as from market close on 22 April 2020 13

• The rise in SEMDEX observed during the week is mainly linked to improved performancesacross the ‘Banking & Insurance’ and ‘Investments’ sectors.

• During the week, net foreign divestments of around Rs 50 million were observed.

% in points % in points

SEMDEX -26.2 -571.9 0.5 7.9

As at 21 May

y.t.d change w.o.w change

Concluding remarks

Unveiling of the National Budget 2020/2021

As we look forward for the National Budget 2020/2021 to be unveiled on 4 June 2020, the stakes, amidst such unprecedented and uncertain times, are high for public andprivate stakeholders towards ensuring that the economy and society regain their dynamism in a progressive, yet resolute, way. While it can be acknowledged that achievingtangible and long-lasting change in support of the nation’s advancement will invariably take time, the Budget exercise can act as an opportune and appropriate platform to (i)comprehensively and dispassionately outline the depth and breadth of turbulences that the economic crisis has instigated as regard businesses operations, job creation andwealth generation across the country; (ii) carefully appraise, in view of that, the inherent resilience of our economic and financial systems to setbacks of such magnitude;and (iii) articulate an ambitious and thoughtfully-designed roadmap that can assist to spearhead the country’s gradual transition to a more prosperous future whilstnavigating in an altogether reshaped global economic and market landscape, notably one which, in all likelihood, is projected to be marked by new behavioural patterns.

Specifically, alongside promoting safe communities and strengthening protection to the vulnerable groups of society, a major target for Mauritius would be to rebuild itsproductive capabilities, rekindle capital investments and restart the economic engine in the periods ahead. Importantly also, targeted stimulus packages are called for tobring about a prompt recovery process over the medium to long term, underpinned by a judicious management of the fiscal space amidst strains thereon. To maximisepayoffs from the afore-mentioned endeavours, a key consideration is to combat deep-seated impediments to economic growth, with structural reforms having a decisiverole to play to duly tackle supply-side bottlenecks to the competitiveness of key sectors, alongside delivering due impetus to expand our economic base and market space.

Gearing up for inclusive and green economic growth

In light of the socio-economic instabilities engendered by the COVID-19 outbreak, a key objective is to, as hinted above, foster a higher real GDP growth pattern in the yearsahead. Meaningfully however, as the country recuperates from the crisis, there is a well-timed opportunity for us to do what it takes to ensure that future economic growthis anchored on increasingly broad-based and balanced grounds in our attempt to uplift the living standard and wellbeing of the population in a wholesome and enduring way.

As the OECD mentioned, “Governments have a unique chance for a green and inclusive recovery that they must seize – a recovery that not only provides income and jobs, butalso has broader goals, integrates strong climate and biodiversity action, and builds resilience.” In Mauritius, while we pursue discussions and contemplate options in relationto reforms and policies that will empower us to head out of the crisis and foster our economic resilience, the time is ripe for the country to scale up initiatives deployed sofar and step up investments in the health, education and public infrastructure fields with a view to building a more cohesive and inclusive society. In addition, we shouldbenefit from embedding even more sustainability into the economic recovery process. On this note, decisive actions are being advocated on the international scene to tackleclimate change and biodiversity challenges as well as accelerate the transformation of nations into low carbon economies, with particular emphasis being laid on greentechnologies, clean transport and sustainable agriculture. That said, steering Mauritius in such trajectories calls for a perceptible change in our mindsets and habits, as thiswill help to reshape the way businesses function and capitalise on digital technologies, household consumption and mobility behaviours unfold, communities interact, etc.

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This report has been prepared by the Strategy, Research & Development (SRD) department of MCB Ltd, with the main authors being:

For more information, please contact the SRD Economic Analysis team on (230) 202-6381/ (230) 202-5814 or economic.analysis@mcb.mu

Vicky Hurynag

Head of Strategy, Research & Development

Nuvin Balloo

Lead Economist & Manager

Jessen Coolen

Team Leader – Economic Analysis