Of a better year… and new normals

13 décembre 2023, 09:20


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“An economist is an expert who will know tomorrow why the things he predicted yesterday did not happen today”

Laurence J. PETER

Last year, at about this same time, the world seemed transfixed with problems and was eyeing a very real possibility of recession over 2023. The IMF, the OECD and others were not in too positive a mood as Mr. Putin’s war in Ukraine was promising a difficult (and costly) winter in Europe, as well as dampened grain exports, since the Black Sea was no longer an openpassage waterway, curtesy of the Russian navy, hell bent on choking off Ukrainians shipping their exports. China was still in the throes of its zero covid policies, which included very severe lockdown protocols. Besides which, its overprimed property market was showing few signs of calming down, as building works looked to be further and further ahead of sales and payments, indicating a market collapse in the making. Europe and especially its powerhouse, Germany, looked like they were losing their zest and the USA was squarely facing the headwinds of interest hikes, which likely promised to rope in both spending and growth at some point.

And yet... one year on and all this looks like having been quite a dishful of over-hyped hullabaloo.

The October 2023 Global Outlook just issued by the IMF, whilst confirming a slowdown in the wake of the global fight against general inflation (except for China), is sure enough more sanguine and predicts that growth levels achieved of 3.5% in 2022 will slow down to just 3.2% this year and 2.9% next year. Advanced economies will be the most responsible for this slow down, their growth rate as a group reducing from 2.6% in 2022 to 1.5% in 2023 and 1.4% next year. Developing and emerging market economies, in spite of no longer being as heavily boosted by China figures as in the past will, nevertheless, clock 4% growth this year and next, dropping just 10 basis points from 2022 levels.

Inflation is still the main one to blame for the damped down prospects. Though it should be reduced from 2022’s 8.7% to 6.9% and 5.8% in the next two years; the Middle East situation developing around Gaza since early October, a war that drags on in Ukraine and the consequences of advanced economies “de-risking” theirs with respect to China, will surely conspire to apply upward inflationary pressures over the coming months. India’s sterling growth rate of 6.3% this year and next is in sharp contrast to that of the world, but even so, it will come down from 7.2% in 2022 and it packs far less clout than similar growth rates for China would, since its GDP is almost 5 times smaller than China’s…

Meanwhile, in the center of the world, or rather the center of our world, the October 2023 World Economic Outlook of the IMF is forecasting 5.1% growth this year (up from 4.6% forecasted in April) and a pallid 3.8% next year (down from the 4.1% forecast of April). Maurice Stratégie, set up by the Economic Development Board in April 2023, to do research, make proposals and moot policies and presumably give MCB Focus and SBM Insights a run for their money, is far more buoyant. It actually projects 7.3% for 2023, in its August 2023 projections. This rather exciting prospect is, we are told, meant to reflect the “impact of recent budget measures and includes second round effects of the measures as well”. Do they have inside knowledge other forecasters seem to be short of? Let us hope so for the country and not hope so for the principles of transparency and equity! Statistics Mauritius, on the other hand, forecasts 5.3 %, MCB Focus tables on around 5% and SBM Insights suggests 5.2%. Who knows? Someone may well lose his mantle of credibility when the final figures come home to roost, though adjustments and corrections to national statistics can sure help (*)…

“There are two classes of forecasters: those who don’t know and those who don’t know they don’t know.”


The 2023/24 budget speech was dominated by several socially supportive measures in an attempt to help the population face inflation head on. A major fiscal reform was also initiated.

There is no doubt that many of the measures proposed to cushion the cost of living were globally well received. So was the fiscal review, which eliminated a special solidarity levy and sliced up the taxable tiers further to be a tad more progressive. However, there is no escaping the fact that serious challenges remain…

Think of inflation first. As a root cause, you need to look beyond commodity prices, freight rates and the petrol market since the main fuel of inflation has clearly to do with the Mauritian rupee losing 22.1 % of its value over the 3 years to 20/10/2023. As we import most of what we consume and since we pay these mostly in dollars (unlike the petrol imports, which STC apparently now pays in Mauritian rupees to Mercantile & Maritime Group, based in Singapore!), the knockon effect on inflation is direct! IMF estimates for 2023 stand at 7.8%. Headline inflation for the 12 months to June 2003 is quoted by Maurice Stratégie to stand at 10.5% whereas YoY inflation registers at 7.9% over the same period. There are indications of a downward trend more recently, though it is not certain that petrol prices in a perturbed world and a small starting kick upwards in the World’s Commodity Price Index since July last (+ 4.3%) will not disturb this trend. What is certain is that budgetary palliatives for low-income earners would have nowhere been necessary in the first place, if the rupee had not been so weak at the knee…

Then we have the trade balance and, even more meaningfully, the Current Account balance. Nominal exports may be climbing somewhat (to Rs 110 million in 2023), but imports for the first six months of 2023 are only covered by exports at the level of 36.6% – a level which is unsustainable in the medium term and this trend has unfortunately been ongoing for some time now. The balance of trade deficit now stands at a hideous 30 % of GDP! Invisibles, of which the export of services – mainly tourism – which sector is doing rather well – do help our current account balance, but still the latter is likely to stand at a crushing deficit of some 11% in 2023 (albeit improving from some 14.5% in 2022).

In addition, we still hold a sticky situation debt wise and only stand to be respectably presentable because of the help of MIC (Rs 50 billion), the use of further Central Bank Reserves that were directly injected in government’s budget (Rs 118 billion) and an exotic list of adjustments and accounting somersaults (**) that helped project an apparent (and welcome!) improvement of our debt/GDP ratio to 79%. It is to be pointed out that this is clearly not too bad by post covid world standards, which show, on average a 92% debt/GDP ratio. However, the fact is that we are not comparing like with like here and that our economy is more fragile than many…

Our future years will clearly demand a much better import cover ratio, some luck on the commodity index front, far enhanced national productivity indices which should then durably stabilize (hopefully improve…) the rupee and help master inflation. This implies far more solid export earnings and hard work, given that, at 6.7% official labour unemployment, we do not have much untapped resources left.

Meanwhile, the Top 100 figures indicate a global improvement in the economic situation and added buoyancy since last year, which which may go some way to explain improved levels of private investment (+14% in 2023, following +22% in 2022) and FDI (some Rs 30 billion being expected in the present calendar year). This is good news indeed, since everything else flows therefrom…

Our sample of this year’s “Top 100 companies”, 396 companies all told, is displaying, as could be expected, a healthy progress with respect to the last two difficult years. In particular, consolidated turnover reached some Rs 395 billion, a nominal progress of almost 25% on the previous year and just over 40% over 2020 figures. Following the consolidated deficits of 2020, as brought about by losses within textile, agriculture and hotel sectors, a consolidated profit of Rs 11.8 billion in 2021 has now been further consolidated to Rs 24.9 billion. No sector was in deficit in this year’s review except for the smallish Media sector and, tellingly, the number of loss making companies fell in both absolute terms (73 v 106) and in relative terms (18.4% , down from 27.5% in the previous year).

True enough, the rupee of 2022 is worth far less than the rupee of 2019 before the covid pandemic hit; government’s emergency measures and the accelerated depletion of our reserves as the earning power of the tourism sector was put on hold for far too long, putting increasing pressure on the local currency . However, one should not neglect the fact that the rupee, except for a stint during Governor Bheenick’s tenure at the Central Bank, has been on a continuously weakening path since at least independence. Who remembers the days when only Rs 13.40 were needed to buy one-pound sterling? Yet, we were much less economically strong then, even as we were more modest in our aspirations…

More specifically, the dollar was worth Rs 32.26 at the beginning of 2015 and already required Rs 36.80 (+14%) by the end of 2019, on the eve of the pandemic. By the end of 2022 (the overwhelming end-period for financials of this year’s sample), it took Rs 44.10 to mobilize one dollar (another +19.8% wrt end 2019). The latest rate, even after some robust market interventions of late, still stands at Rs 44.35, after peaking in March at 47.15…

“For every economist there exists an equal and opposite.”


Still, the latest consolidated figures for turnover and profits, even if deflated by 19.8% for comparison to 2019 figures ARE better than those 2019 figures by 12.2 % for turnover and 18.5% for profits, which is no mean progress. Another way of looking at those figures in a more straightforward way is to indicate that Profits before tax, as a percentage of Turnover improved from 5.97% in 2019 to 6.31% last year – no mean feat, if you ask me.

The Hotel sector renewed with successful operations after what were two disastrous years. However, even though consolidated P&Ls showed an encouraging profit before tax of Rs 6.9 billion, this must not hide the fact that fully 12 of the 29 hotel companies sampled actually made losses in ‘recovery year’. It is apparent that the bigger boys did much better than the smaller operators and this may mean that larger structures are more efficient or that the market of ‘revenge’ holiday makers are more likely to feature at the top end of the quality/price scale. Consolidated turnover, though more than double those of the dark years, were only 12% ahead of 2019 figures, which suggests improvement is still possible when compared to rupee devaluation levels of 20 %. On the other hand, consolidated profits almost tripled with respect to 2019, suggesting greater efficiency, a most welcome fact in view of the 2020 and 2021 losses, which still need to be mopped up first…

The Agriculture sector did satisfactorily, pulled up by the performances of Omnicane, Terra and Alteo and the rupee devaluation was crucial, especially when it translates overseas investments back to local currency. Rogers Agri is a notorious outlier requiring improvements, but Omnicane swung to more than decent profitability of Rs 627 million after the massive losses of the previous years.

Within the Textile sector, results were quite decent, RT Knits again posting outstanding results of just over 20 % profit as a percentage of turnover, though they were down from the 30% achievement of the previous year. CIEL Textile still dwarfs the sector, posting turnover that is more than twice the 2021 figure of the next largest operator, Compagnie Mauricienne de Textile (CMT) and achieving profits of just over one billion (6.3% on turnover). CMT a longtime operating champion within our free zone did not send in its most recent financials, which can probably only spell one message: we all hope it gets better this year! World Kits, Laguna Clothing and especially Denim de l’ile (14.7% on T/O), had very commendable results.

I suppose the highlight of the Construction sector must be Afcons, the main contractor in Agaléga who, posting results to 31st March 2023 after massive works building a state of the art jetty and just about to complete a 3,000 meter long runway fit for landing Boeing 737-900 planes as well as nosier spy planes of the P81 variety; indicates an annual turnover of just over Rs 1 billion, whilst bleeding no mean losses of Rs 903 million. Quite the story when the final bill for the Agaléga works that are meant, at least according to the official story line, to “get us closer to our 289 brothers and sisters”, in Agaléga, will stand at anywhere between 8.8 and 11 billion rupees. However, to put matters in perspective, the filed accounts of Afcons, whose head office is at 6, Goyaviers Avenue in Quatre Bornes, show accumulated profits in previous years to the tune of Rs 1.42 billion.

The 59 construction companies reviewed showed a modest improvement in consolidated turnover and an actual fall in profits, it being noted that last year’s pack leader, both turnover and profits wise, Larsen & Toubro, who completed all metro works, has not filed new accounts since March 2021. Remarks of last year need to be reiterated: it looks like suppliers of various sectorial inputs and materials are doing globally better than the builders themselves are.

Symptomatically, the operating sector with the largest turnover is, for the first time ever, the Oil and energy sector, which, over only four companies, registered consolidated sales of Rs 54.7 billion. The sizeable jump in sales must surely be linked to price surges, the rupee devaluation and probably renewed jet fuel sales and some bunkering. Their profits, in this heavily regulated market, were largely contained at 2.11% of turnover (2.96% in the previous year). Vivo Energy and Total were the better performers.

The results within the Supermarkets/ Distributive sector showed interesting dynamics. Udis ltée (Super U) whose second placed slot had been usurped last year by Seven Seven came back this year with a vengeance, adding Rs 1.35 billion worth of sales over 2021. Winners still tops the chart! Seven Seven, last year’s runner-up, also improved adding some Rs 425 million more sales but slipped to third place. Paltoni Retail (Intermarts at Beau Bassin, La Croisette and Rose Hill) still coy about its profits, slipped by one slot on the T/O rankings, to 7th and Family World slipped to tenth place but largely hung onto its splendid profitability track record, clocking 8% on sales. On a consolidated basis, whilst sales grew by 9%, the bottom line that counts showed efficiency gains or better mark-ups, by improving by fully 84%. Let us not also forget that a 9 % growth in sales when inflation has been close to 10% suggests no volume growth. In the Commerce (retail) sector, on the other hand, consolidated sales increased by a solid 24%, far ahead of profit growth, which sounds counter intuitive in a period where one would have expected ‘necessities’ to be the dominant sales items. Mammouth group crossed beyond the Rs 3 billion sales mark with ease and the Brand House and Le Warehouse grew in its wake. J. Kalachand dropped one slot, knew no growth but still displayed impressive, to-be-envied profit levels.

In the Insurance sector, the bigger boys have it! Swan and NIC improved their profitability, whilst MUA and SICOM went the other way. Banking did great and, significantly, six of the ten most profitable groups in Mauritius are now banks.

Within the Automotive sector, the scramble for top slot led to Axess just pipping Leal & Co Ltd this year, after it had been its runner-up for the last two years. Only Rs 20 million worth of sales separated the two. Leal & Co may well be satisfied with being top dog profitability wise, though, adding an impressive Rs 163 million to its bottom line (a sliver over 10 % on sales). Toyota (3rd placed) and CFAO (4th) showed the most impressive progress year on year.

Both Mauritius Telecom and Emtel grew their sales within the Telecommunications sector, but while MT improved its bottom line by 66%, Emtel regressed somewhat, though it maintained its leadership in terms of profits as a percentage of turnover, staying with an 18% achievement level v/s MT’s more modest 11.3 %.

There was substantial progress within the Health sector and such progress is unlikely to stall for now as substantive projects are announced and implemented. CIEL Healthcare, building on from the Clinique Darné core operation still tops the charts by registering substantial growth of 15.7%. NATEC Medical had another great year of growth (+44 %) and has now climbed onto the third step of the podium for sales size. This is all the more commendable as it is a full exporter, which together with Ajanta, a number of clinical tests and a sprinkling of ‘medical tourism’ is meant to foreshadow a new economic pillar for the future. No new exporting players are recorded for the moment, though, as we swallow a patience pill.

Velogic is still dominant in a sector where there has been much change from one year to the next, to the point where the Logistics/Freight sector can claim the most topsy-turvy record over the last two years. Characteristically, Velogic’s turnover fell from Rs 4.6 billion as at June 2021, through to R 3.7 billion to June 2022 and Rs 3.4 billion to June 2023. However, profits went up, over the same period, from Rs 194 m through Rs 265 m to Rs 350 m. The beginning of an explanation is linked to spiking freight rates during the covid pandemic followed by substantial efficiency gains. Cargotech, one of the few other freight companies showing a decline in turnover, dropped 3 slots to fifth place and Freight & Transit more than doubled its sales over last year to take second spot. Logidis and Hellman Logistics remain negative outliers in a swinging sector.

Of the smaller sectors, the Betting & Lottery sector indicated decent figures, when it actually filed any; 9 of the sample of 18 having not posted any financials since 2021 and, in some cases , even 2019! Why such bashfulness? For those still hoping to profitably sell the local Casinos, let us just hope that figures that are more recent than the losses of 2019 are better looking… Media was the only sector registering a consolidated loss dragged down by MBC, Mediacom and La Sentinelle. Advertising had a better year and if the sector had 11 loss makers last year, this vastly improved to just four. In the Printing sector, the same redemption path was followed, the 18 loss makers of the 2020 edition, being reduced to nine last year and just five this year.

As to the Parastatals, we all understand that they are not always to be judged and rated under the same criteria used for the private sector, but surely good governance standards and transparency on the use or engagement of public funds demand better visibility...

To that effect , whilst we chose to commend the parastatals that were actually producing timely accounts last year, it is necessary this year to highlight that fully 13 of the extended sample of 46 have not published accounts since 2020 (which is at least 2 years late on schedule) or even earlier. We therefore must name and hope for shame from… Central Water Authority (June 2019), MITD (June 2020), MGI (June 2019), Mauritius Research & Innovation Council ( June 2020), Statutory Bodies Family Protection Fund (June 2020), Mauritius Oceanography Institute ( June 2017 – though they have a Strategic Plan to 2024 !), Beach Authority ( June 2020), Gambling Regulatory Authority (June 2018, “Prompt and Efficient”), Fashion and Design Institute ( June 2020), Public Officers Welfare Council (June 2020), Town n Country Planning Board ( June 2018), National Coop College (June 2020), MARENA ( June 2018) as well as better visibility from the 50 odd other parastatals next time round.

If we are to believe the consolidated figures of the Top 100 series, the economy is doing well and has turned the corner created by the covid 19 episode. Unfortunately there is more to it than meets the ‘Top 100’ eye eye and the nation must certainly not fall for the story that we are doing fine and that we can continue to live above our means, as we have been doing for decades now.

By the way, does it strike anybody that it has been a very, very, very long time since we have generated a budget surplus in any one year? Is this inconsequential, even as debt has generally increased faster than GDP? Is it also inconsequential for a current account balance to remain negative for numerous years (***)? Is paying for our imports with freshly printed rupees indeed our way forward ?

Maybe a new normal is raising its head and, against all logic, is hoping to be here to stay?

(*) L'express l Data Spinning

(**) L'express l GDP Overestimation

(***) World Bank l When Is a Current Account Deficit Bad?