Mauritius expects tourism earnings to grow 8.2% this year with European tourists returning as Eurozone economies recover, but analysts say real growth in the sector will come from targeting Asia.
Mauritius saw 993,000 tourists last year, 2.9% higher than 2012, however tourism earnings were actually down 8.6% at USD 1.34 billion in 2013 compared with the previous year. Europeans made up 57% of tourist arrivals, while Asians accounted for 10% of international travelers entering the country.
Travel and tourism accounts for 11.3% of the country's GDP. Barclays Capital believes the tourism industry has upside potential, but the expected 3.2% increase in tourist arrivals in 2014 may not be enough for a major turnaround in the services sector. Indeed, only one hotel, featuring 126 rooms, is being planned in the country.
"Nonetheless, with the increased attention on diversifying its source markets, with a focus on arrivals from Asia, we remain upbeat on the sector's recovery prospects," Barclays Ridle Markus noted.
Last year, the number of Indian tourists rose by 3.7% to 57,255, while the number of visitors from China doubled from to 41,913.
JOB CREATION
The World Travel & Tourism Council expects the country's tourism and travel sector to grow by 4.4% a year over the next decade, with its share of total national investment rising to 6.5% by 2024 from 5.8% in 2014.
"Travel & Tourism is expected to have attracted capital investment of MUR 5.0 billion (USD 160 million) in 2013. This is expected to rise by 1.7% in 2014, and rise by 4.8% per annum over the next ten years to MUR 8.1billlion in 2024," the WTTC said in its outlook on the country.
Tourism is an important source of employment for the population of 1.3 million people. The sector generated 63,000 jobs last year (around 11% of total employment), and the figure is expected to reach 82,000 within a decade, according to WTTC estimates.
"The total contribution of Travel & Tourism to employment (including wider effects from investment, the supply chain and induced income impacts) was 137,500 jobs in 2013 (23.9% of total employment)," WTTC said. "This is forecast to rise by 3.6% in 2014 to 142,500 jobs (24.3% of employment). By 2024, Travel & Tourism is forecast to support 179,000 jobs (26% of employment), an increase of 2.3% per annum over the period."
AFRICA'S MOST COMPETITIVE ECONOMY
With annual GDP growth estimated at a steady 4% until the end of the decade, Mauritius is widely seen as a model of stability in the rough-tumble of Africa.
However falling tourism receipts, along with a weaker construction sector and poor sugar production, saw the economy grow a modest 3.1% growth in 2013. Real GDP growth weakened to 3% in the last quarter of 2013, compared to the previous quarter, as agriculture, mining, construction, accommodation and food services performed poorly. Construction was especially hard hit, shrinking by 19% in the last quarter.
But the Bank of Mauritius expects the economy to pick up steam.
"On the domestic front, notwithstanding the slowdown in growth in 2013Q4, economic activity is projected to pick-up as the recovery in main export markets takes hold," the central bank said on April 29 after deciding to leave interest rate unchanged at 4.65%.
"The GDP growth forecast has accordingly been maintained within a range of 3.7-4.0% for 2014, up from an estimate of 3.2% for 2013."
Management consultant KPMG said that a forward-looking approach by policy makers has transformed the economy from a largely agricultural based economy to an international services and financial hub.
"Despite a poor endowment of natural resources and high vulnerability to external shocks - intrinsic to a small open economy - the country has been able to record and sustain strong economic growth while transforming the structure of the economy to support private sector development in various industries," KPMG noted.
Mauritius recently overtook South Africa as Africa's most competitive business environment, according to the World Economic Forum's Global Competitiveness Report 2013-14.
The solid fundamentals should help Mauritius at time of relative uncertainty, especially as the European economy may not recover as quickly as hoped.
The feature was produced by alifarabia.com exclusively for zawya.com.
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