Care Edge Forecasts: Growth Outlook is Modest with Downside Risks
According to the latest report from Care Edge, the Mauritian economy is heading into 2026 amid uncertain conditions, characterized by increasing external risks and limited internal maneuverability.
Published late last week, the "Mauritius Economy Update" report by Care Edge presents a cautious assessment of the national economic situation and highlights fragile prospects for the upcoming year.
In 2025, the GDP growth rate was recorded at 3.2%, aligning with the estimates from Statistics Mauritius published in December and slightly above the Bank of Mauritius's forecast of 3.1%. However, according to the report's authors, this marks a significant slowdown compared to the 4.9% expansion recorded in 2024.
For 2026, initial projections indicated a growth of 3.4%, bolstered mainly by the resilience of the tourism sector and an anticipated recovery in private investment. However, the recent developments in the Middle East conflict have disrupted this balance, increasing uncertainties regarding international trade and commodity prices.
In this context, the baseline scenario now anticipates growth close to 3%, provided that geopolitical tensions are contained. Conversely, an escalation of the conflict could reduce economic growth to about 2.3%. This assumption is based on rising fuel costs and inputs such as fertilizers, gas, and airfares, as well as potential disruptions in supply chains.
These developments could impact several key sectors: tourism, construction, and agriculture. Additionally, budgetary constraints and inflationary pressures would limit the authorities’ ability to support economic activity through public spending.
At the same time, private investments are expected to remain subdued, hampered by stringent financing conditions and a less dynamic real estate market, indicating moderate activity in construction.
Inflation: 2.7% in March
Recent trends in consumer prices reflect an apparent easing, which, however, masks persistent tensions on the structural components of inflation.
In March 2026, overall inflation slowed to 2.7% year-on-year, down from 3.5% the previous month. This deceleration, according to the authors, confirms a trend towards alleviating immediate price pressures, primarily due to a decline in the category of food and non-alcoholic beverages, where inflation decreased by 3%. A decrease was also noted in the hospitality and accommodation services, down by 0.7%.
However, Care Edge believes this improvement does not capture the entire price dynamic. Underlying inflation, which excludes the most volatile items, remained stable at 5.5% in March, indicating that fundamental pressures are still significant.
The outlook for 2026 suggests inflation levels exceeding the initial forecasts of the Bank of Mauritius, set at 3.6% before the rise in geopolitical tensions. The crisis in the Middle East and disruptions in maritime traffic through the Strait of Hormuz have contributed to an increase in global energy prices, directly affecting a Mauritian economy heavily reliant on imports.
This situation is expected to lead to higher costs for fuels and electricity production locally. Additionally, the reconfiguration of trade routes, extended transport times, and increased insurance premiums are driving up logistical costs.
"These combined factors are likely to exert increased pressure on import prices, with anticipated repercussions on several sectors, particularly food. The rising costs of agricultural inputs, such as fertilizers and fuel, as well as increased transport fees, could prolong inflationary tensions in the coming months."
Trade Balance Under Pressure
The outlook for Mauritius's trade balance in 2026 suggests apparent relative stability but is exposed to external risks that could alter the expected equilibrium.
According to updated estimates in March 2026, incorporating the effects of the Middle East conflict, total exports are expected to rise by 3.6% to approximately Rs 501 billion. At the same time, imports are anticipated to increase by 3.2%, reaching around Rs 574 billion. This parallel evolution leads to an overall stable trade deficit, estimated at Rs 73.5 billion in 2026, compared to Rs 73.4 billion the previous year.
However, this baseline scenario relies on assumptions of continuity in trade flows and international price conditions. Care Edge suggests that the trade balance could deteriorate if geopolitical tensions escalate, particularly due to disruptions in maritime routes and energy supplies.
The anticipated increase in fuel costs, maritime freight, insurance, and other energy-intensive inputs is likely to significantly inflate the import bill. In an economy heavily reliant on external purchases, even stability in imported volumes could translate into an increase in the total value of imports.
On the export side, some support remains, particularly extended access to preferential markets through the Africa Growth and Opportunity Act until December 2026, which continues to support textile and clothing sales to the United States. However, rising global logistical costs and supply chain disruptions could hinder the expansion momentum of exports, the report notes.
In this context, the trade outlook remains contingent on international cost developments and maritime route stability.
