Mauritius a massive help to the economic development: Ravelonarivo

Madagascar’s Prime Minister Jean Ravelonarivo said neighboring island Mauritius could be a massive help to the economic development of his country, when he paid a courtesy visit to both the prime minister and president of Mauritius on April 30.

Jean Ravelonarivo

Discussions were on bilateral trade and the need to concentrate efforts of both islands in the Indian Ocean region, according to a press release after the meeting.

Madagascar is amazed by the successful economic and social development in Mauritius and want to follow the trend, Ravelonarivo said.

Ravelonarivo asked Mauritian authorities to come in Madagascar and boost its economic development.

He said that Madagascar wants to inspire the Mauritian Export Processing Zone (EPZ) model to achieve its industrial takeoff.

Mauritius on its part wants to share its model of industrial development with the neighboring island as part of a bilateral economic partnership that is more prosperous.

Madagascar Economic Outlook

  • The still-sluggish economy grew slightly faster (2.6%) in 2013 (1.9% in 2012) thanks mostly to mining and should speed up in 2014 (3.7%) and 2015 (5.4%) as the political situation normalises.
  • Madagascar took another step towards recovery from its five-year political crisis by holding presidential and parliamentary elections in the last quarter of 2013, opening the way to renewed international acceptance and revival of economic and social development.
  • The country’s participation in global value chains is still small despite its many assets, such as tourism, a free zone for textile factories, ICT-related services and natural resources (agriculture and mining).

The country’s political crisis since 2009 is still hampering economic and social progress. Economic growth of 1.9% in 2012 and 2.6% in 2013 was unimpressive against the International Monetary Fund’s estimated sub-Saharan average of 5.1% and an annual national population increase of 2.8%. It was mainly driven by extractive industries, agro-industry, banking, transport, livestock and fisheries. Macroeconomic stability was maintained by drastic budgetary adjustments that undermined the government’s ability to provide basic services and also held back economic recovery.

The budget deficit deteriorated to 3% of gross domestic product (GDP) from 1.3% in 2012. The current account deficit was held at 8.8% of GDP (close to its 8.3% value in 2012). Inflation rose to 6.9% from 5.8% in 2012. If the political situation normalises after the December 2013 presidential and parliamentary elections, growth could improve in 2014 to a projected 3.7% and in 2015 to 5.4%, largely due to agriculture, agro-industry, extractive industries, tourism and construction.

Sluggish and poorly-distributed growth has not improved living conditions for most people and has damaged efforts to achieve the Millennium Development Goals (MDGs) by 2015. A nationwide 2012/13 survey of MDG progress showed more than 70% of Madagascans (including 77% in the countryside) lived below the national poverty line. Underemployment is especially high for young people and the crisis has made jobs precarious for 81% of the workforce, especially women in rural areas.

Although global value chains (GVCs) are an opportunity for the economy to expand, Madagascar’s participation is limited to exporting unprocessed goods and selling imported goods to consumers. The country does have many assets – tourism, a free zone for textile manufacturing, ICT-related services and natural resources in agriculture and mining. To participate fully in GVCs, it must end recurrent political unrest, fight corruption strongly, train the workforce and improve infrastructure.

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