The JEC reviewed the possible impact of the global financial crisis on the economy of Mauritius and noted that, in spite of the US Treasury bail-out plan and the coordinated approach of UK, France, Germany and Italy, the global stock markets continue to be extremely volatile and a number of financial institutions in both Europe and US are still being subject to systemic risks. The fear of global recession is becoming increasingly real.

The JEC recognizes that our banking sector continues to be well capitalized, properly regulated, with loan to deposit ratios typically in the range of 70-75% and, with minimal wholesale financing dependency, the sector has a strong balance sheet position. Consequently, the financial system in the country is considered to be resilient and not subject, at present, to any systemic risk.

All indications suggest the persistence of a global financial crisis, with higher risk of a “more steep and longer” economic recession, which will trigger a downturn of the world economy, as already highlighted by the IMF. This downturn will impact adversely on our more important export and tourist markets, namely, USA, France, UK and Germany. Accordingly, the last months of 2008 and the whole of 2009 will be difficult times for our tourism and exports of textiles. The sugar sector, already subject to significant price decrease will also be under strain. As regards the offshore sector, any prolonged global economic and financial downturn is likely to impact its growth potentials. The ICT/BPO sector is expected to maintain its present positive trajectory.

The volatility of the global financial markets and its impact on the main currencies of the trading partners of Mauritius, will need strong and concerted action to protect employment and investment in a context of price instability.

The JEC and its members are working closely with the authorities on such measures which would be implemented urgently, at the level of Mauritius, to accelerate reforms, maintain investment, continue to diversify our economic base and sustain the momentum of economic growth during the course of the next year, with a view to mitigating the adverse impact of the international financial crisis and the expected global economic slowdown.

9 October 2008