World Bank Flags 2.7% Growth and 90% Debt Ratio for Mauritius

The World Bank's latest Macro Poverty Outlook, published in October 2026, paints a cautious picture of the Mauritian economy, highlighting a sharp slowdown in growth, a rising debt burden and mounting inflationary pressure driven by global uncertainty.

Mauritius's real gross domestic product (GDP) is projected to grow by just 2.7% in 2026, a significant drop from 4.9% in 2024 and 3.2% in 2025. The World Bank attributes the deceleration primarily to higher production and transport costs, which are squeezing household consumption and business activity. A gradual recovery is forecast from 2027 onward, with growth expected to reach 3.1% and then 3.3% in 2028.

Public debt is estimated at around 90% of GDP in 2026, a level that international financial institutions generally consider high for a small island economy. A debt-to-GDP ratio at this level leaves limited fiscal room for government spending or emergency stimulus if economic conditions worsen.

Inflation is also accelerating. The consumer price index (CPI), which measures the cost of everyday goods and services, is forecast to rise to 4.7% in 2026, up from 3.7% in 2025. It is expected to peak at 5.5% in 2027 before moderating to 3.6% in 2028. Fuel prices and the rising cost of imported goods are the main drivers, reflecting broader disruptions in global commodity markets and maritime freight.

The Mauritian rupee has also come under pressure, depreciating by 2.5% recently due to global uncertainty and strong demand for foreign currencies. A weaker rupee makes imports more expensive, which feeds directly into inflation and household budgets.

The current account deficit, which measures the gap between what Mauritius earns from abroad and what it spends abroad, is projected to widen to 6.8% of GDP in 2026. This reflects the country's heavy reliance on imports, including fuel, food and consumer goods, at a time when export revenues and tourism receipts face headwinds.

What this means: For ordinary Mauritians, these figures translate into continued pressure on the cost of living. Higher inflation means groceries, fuel and imported goods will cost more, while a weaker rupee reduces the purchasing power of savings and wages. For the government, a debt level near 90% of GDP narrows the options available to fund public services or respond to future shocks. Investors and businesses operating in Mauritius will be watching whether the authorities can stabilise the currency and contain inflation without further dampening growth. The World Bank's projections suggest the next two years will require careful economic management.

Source: ION News