Mauritius Economy Shows Mixed Signals as Industry, Tourism and Trade Trends Diverge
Industrial output and tourism improve, while inflation rises and the merchandise trade deficit widens in 2026
Mauritius recorded mixed economic developments in 2026, with industrial production and tourism showing signs of improvement while inflation and the merchandise trade deficit increased. Industrial production rose 1.7% year-on-year (YoY) in Q1 2026, while tourist arrivals increased 6.6% YoY in August. At the same time, headline inflation reached 4.9% in August and the merchandise trade deficit widened amid higher imports.
Industrial Production Posts Modest Growth in Q1 2026
The Industrial Production Index increased by 1.7% YoY in Q1 2026, indicating modest expansion in industrial activity.
Manufacturing, which represented 84.8% of total industrial output, grew 1.0% YoY. The increase was supported by a 2.1% rise in non-export-oriented enterprises (EOE) and a 3.9% increase in sugar milling. However, EOE recorded a 6.4% decline, partially offsetting manufacturing growth.
The electricity, gas, steam, and air-conditioning supply sector recorded the strongest expansion, rising 8.8% YoY. Water supply, sewerage, waste management, and remediation activities increased 2.3%, while mining and quarrying output declined 2.3% YoY.
On a quarter-on-quarter (QoQ) basis, industrial production decreased 18.2% in Q1 2026, reflecting the seasonal pattern of industrial activity, particularly in manufacturing.
Industrial production is expected to maintain a moderately positive trend, supported by resilient manufacturing activity and rising demand for electricity and utility services from businesses and households. However, weak performance in mining, sugar milling and some export sectors, particularly textiles, is expected to limit stronger growth.
Tourism Arrivals Recover in August
Tourist arrivals increased 6.6% YoY to 123,102 in August, taking total arrivals during January-August 2026 to 927,735, up 2.7% YoY.
Europe remained the largest source region, accounting for 62.1% of total arrivals in August. France contributed 33.8%, followed by the UK at 18.7% and Germany at 15.0%, with arrivals from Europe increasing 7.6% YoY.
Asia recorded the highest YoY growth in August at 29.3%. The increase was supported by higher arrivals from India, which rose 12.1% YoY and accounted for more than half of total arrivals from the region, the Middle East, which recorded 65.2% YoY growth, and China, where arrivals increased 9.0% YoY.
Gross tourism earnings rose 16% YoY to MUR 9.1 billion in July. During January-July, tourism receipts increased 17.6% YoY to MUR 65 billion, supported by steady visitor spending.
The stronger increase in tourism receipts compared with arrivals indicates that average tourist expenditure remained robust, supporting the sector's contribution to economic activity.
The tourism outlook has improved slightly following the August recovery in arrivals. Diversification of source markets towards Asia, the Middle East and Africa, alongside ongoing efforts to strengthen air connectivity and develop new routes, is expected to support tourism activity through 2026.
Headline Inflation Rises to 4.9%
Headline inflation increased to 4.9% YoY in August, compared with 4.4% in July, reflecting higher transport and food prices.
On a month-on-month (MoM) basis, transport recorded the strongest increase at 1.39%, followed by food and non-alcoholic beverages at 1.24%. Transport prices rose following an increase in the retail fuel price by STC from Rs 64.25 per litre to Rs 70.25 per litre, contributing to higher transportation and operating costs. Food prices also increased during the month.
Core inflation, however, declined to 4.0% in August from 4.3% in July. It continued to trend downward and remained below headline inflation for the second consecutive month.
The recent increase in headline inflation was driven by more volatile components, particularly fuel and food prices, rather than broad-based price increases across the economy.
Inflation remained above the midpoint of the Bank of Mauritius' 2-5% target range and close to the bank's projected average inflation rate of 5.0% for 2026.
Inflation risks remain tilted to the upside. The Bank of Mauritius has highlighted higher international oil and commodity prices, disruptions to global shipping routes, exchange rate pressures and geopolitical tensions as factors that could increase imported inflation.
Given Mauritius' high dependence on imports, sustained increases in fuel and transport costs could pass through to domestic prices, particularly following the recent re-escalation of the conflict, which has pushed global oil prices close to USD 100 again.
At the same time, food subsidies, moderating domestic demand and tighter monetary policy are expected to help contain inflationary pressures. Headline inflation is therefore likely to remain near the upper end of the bank's target range during the remainder of 2026.
Merchandise Trade Deficit Widens
Mauritius' merchandise trade deficit widened to MUR 23.8 billion in June 2026 from MUR 18.9 billion in June 2025, as imports increased 18.8% YoY compared with 5.6% YoY growth in exports.
Higher imports were driven by increased purchases of mineral fuels, lubricants and related materials, which rose 34.4%. Imports of chemicals and related products increased 30.5%, manufactured goods classified chiefly by material rose 22.3%, and food and live animals increased 8.2%.
Export growth was supported by chemicals and related products, which increased 51.5%, manufactured goods classified chiefly by material, which rose 5.4%, and ships' stores and bunkers, which increased 15.3%.
These gains were partly offset by lower exports of miscellaneous manufactured articles, down 6.6%; machinery and transport equipment, down 12.1%; and food and live animals, down 2.9%.
For January-June 2026, Mauritius' cumulative merchandise trade deficit widened to MUR 114.3 billion, compared with MUR 100.8 billion during the corresponding period of 2025.
The deterioration reflected an 8.8% YoY increase in imports, which significantly exceeded the 0.3% growth in exports. Imports rose on a larger fuel import bill, partly offset by lower imports of beverages and tobacco and manufactured goods.
On the export side, growth was constrained by weaker exports of mineral fuels, lubricants and related materials. Higher exports of food and live animals and chemicals and related products partly offset these declines.
Mauritius' external trade position weakened further in June. The outlook remains uncertain amid ongoing geopolitical tensions in the Middle East and disruptions to key shipping routes, which could increase freight, fuel and import costs and weigh on global trade activity.
The extension of the African Growth and Opportunity Act (AGOA) through 2028 provides greater certainty for Mauritian exporters, particularly in the apparel sector, and supports export earnings from preferential access to the US market.
Tourism receipts and other services exports are expected to continue supporting the balance of payments, while stronger merchandise export growth will be needed to ease pressure on the trade balance in the months ahead.
Foreign Exchange Reserves Rise in August
Mauritius' gross official international reserves increased to MUR 485.9 billion (USD 10.2 billion) in August 2026 from MUR 460.9 billion (USD 9.7 billion) in July.
Import cover based on imports of goods and services, excluding Global Business Company (GBC) services, increased to 14.4 months in August from 13.7 months in July. Under the Bank of Mauritius' enhanced metric incorporating GBC-related imports, import cover rose to 10.5 months from 10.0 months.
In August 2026, the Mauritian rupee (MUR) averaged MUR 47.6 per US dollar (USD) and MUR 55.2 per euro (EUR).
Against the USD, the MUR appreciated 1.4% over the three months to August 2026, while recording cumulative depreciation of 1.1% between March and August 2026. On a YoY basis, the MUR depreciated 3.1% against the USD in August 2026, while appreciating 0.6% MoM during the month.
Against the EUR, the MUR appreciated 0.8% over the three months to August 2026 but registered cumulative depreciation of 0.7% between March and August. Compared with August 2025, the MUR depreciated 2.2% against the EUR, while recording MoM depreciation of 0.8% in August.
The MUR continues to face depreciation pressures linked to Mauritius' structural trade deficit, sustained demand for foreign currency to finance imports and the strength of the USD.
The Bank of Mauritius has continued to support the foreign exchange market through targeted interventions, injecting a cumulative USD 80 million between January and September 2026, compared with USD 115 million during the corresponding period in 2025.
The lower level of intervention suggests some improvement in foreign exchange market liquidity, although underlying demand for foreign currency remains elevated.
Exchange rate developments will continue to be influenced by tourism receipts, export earnings, global commodity prices and broader USD dynamics. The Bank of Mauritius is expected to remain proactive in maintaining orderly market conditions.
Key Economic Indicators in 2026
According to data from Statistics Mauritius and the Bank of Mauritius, headline inflation stood at 4.9% in August 2026, while core inflation was 4.0%. The key policy rate remained at 4.75% from May through August.
Merchandise exports stood at MUR 9.8 billion in June, while imports reached MUR 33.5 billion, resulting in a monthly trade balance of -MUR 23.7 billion.
The USD/MUR period-average exchange rate stood at 47.6 in August. Gross official international reserves reached MUR 485.9 billion, while import cover stood at 14.4 months excluding GBC services and 10.5 months including GBC services.
Tourist arrivals stood at 123.1 thousand in August, while gross tourism earnings were MUR 9.1 billion in July.
Source: Statistics Mauritius, Bank of Mauritius. Core inflation, denoted by data for category Core 2, excludes ‘food, beverages, tobacco’, mortgage interest, energy prices, and administered prices from the CPI basket.