The United Kingdom officially entered recession in the second half of 2023. According to data published by the British Office for National Statistics, gross domestic product fell by 0.3% in the fourth quarter of 2023. How does this decline impact the Mauritian economy? Point.
The UK economy officially entered recession in the last three months of 2023. Economist Bhavish Jugurnath explains that this means that Gross Domestic Product (GDP) has declined for two consecutive quarters. “To put things into perspective, the last recession in the UK occurred in 2020 due to the Covid-19 pandemic. Although it only lasted six months, the 20.4% drop recorded between April and June 2020 was the largest on record,” he points out.
Bhavish Jugurnath also recalls that the recession triggered by the global financial crisis in 2008 persisted for five quarters, or 15 months. “I expect this new recession to also last a few months,” continues the economist.
However, industrialist François de Grivel is of the opinion that the recession in Great Britain will not have a significant impact on the Mauritian economy. “The recession will mainly affect low and mid-range production, whereas in Mauritius, we mainly produce mid- and high-end for the British market,” he says. Furthermore, he argues that in addition to the United Kingdom, other markets in Europe such as France and Germany are also facing financial difficulties. “However, we are continuing our activities normally,” says the businessman.
Precautions and solutions
In order to avoid the repercussions of the recession in Great Britain in Mauritius, economist Bhavish Jugurnath is of the opinion that there is a need to diversify the search for new export partners. “We need to turn more towards Asian and African countries,” he recommends. For his part, François de Grivel affirms that Mauritian operators must continue to focus on high-end products. “Normally in times of recession, the high-end niche is not really affected. It is rather the low-end products that remain more vulnerable,” he explains.
Fall in exports to the United Kingdom
Over the four quarters to the end of October 2023, the total value of UK imports from Mauritius reached around £795 million, according to Bhavish Jugurnath. “This represents an increase of 34.3% or £203 million at current prices compared to the four quarters to October 2022, representing a significant increase in UK imports from Mauritius. » With this new recession, the economist expects a drop in British imports from Mauritius. “Eventually, Mauritian industries will be affected,” he says.
According to Bhavish Jugurnath, the textile and clothing sector will be mainly affected. “The United Kingdom imports a significant volume of textiles, clothing and accessories from Mauritius. Furthermore, Mauritius supplies fish and seafood products to the British market,” he adds.
Jean Claude IP Man Pun, director of Mac'Allan Ltée and member of SME Chambers, agrees. “With a decline in British purchasing power, we can expect a decline in exports to this market,” he says.
Tourism: the British market still remains strong
145,873. This is the number of British tourists that Mauritius welcomed in 2023, representing the second largest tourist market after that of France. Sydney Pierre, CEO Hospitality and Conservation of the Janus Continental Group, explains that the British market was able to do well after the Covid-19 crisis, riding the wave of “revenge tourism”. “Arrivals from this market have even seen record numbers. Furthermore, the latest campaign which has not yet been completed by certain tour operators was a great success,” he points out.
In addition, he argues that the phenomenon of last minute reservations among the British is still very present, representing 14% of reservations. “The English still have an appetite for travel despite the crisis. So, I don't think the recession will have an impact on tourist arrivals from Britain,” says Sydney Pierre.
He says he also notes an increase in demand for “All Inclusive” and cruises on the British market. However, it highlights that as all other destinations also covet this market, Mauritian operators must work harder to get their share of the pie.
