The World Bank expects global economic growth to hold steady at 2.7% in 2025 and 2026. Low-income countries are expected to bounce back from a low growth of 3.6% in 2024 to a higher rate of 5.8% on average for 2025 and 2026, while high-income economies are expected to grow at a modest rate of 1.8%. The World Bank is expecting a GDP growth rate of 5.6% for Mauritius in 2024, higher than the forecast of 5.1% from Statistics Mauritius and is predicting a reduction in growth rate closer to the long run steady state rate of 4% for 2025- 2026. This growth rate is in line with the prediction for middle-income economies.
At its last MPC meeting, the Bank of Mauritius has indicated that GDP growth was broad-based and driven by the construction sector, financial services, tourism, and trade sectors. On the demand side, growth was mostly driven by consumption and investment. Major economic sectors are expected to post positive performances in 2025. The Bank projects growth to be between 3.5 to 4.0 per cent for 2025. The output gap is expected to remain in positive territory and to contribute to underlying inflationary pressures.
Global growth is stabilizing amidst lower global inflation and growing trade in goods and services. Global inflation continued to decline last year due to falling energy and food prices, improving supply chains, and the delayed impact of stringent monetary policies. Going forward, global headline inflation is forecast to decline to an average of 2.7 percent in 2025-26, broadly consistent with target levels in advanced and emerging economies. On the other hand, Global trade in goods and services rebounded in 2024, growing by an estimated 2.7% after a slow expansion in the previous year. Global trade is predicted to grow by 3.1% and 3.2% in 2025 and 2026, respectively.
However, the growth prospects will be insufficient to foster sustained economic development, with the possibility of further headwinds from heightened policy uncertainty, adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters. The modest growth outlook and various challenges emphasize the necessity for decisive policy measures. Global policy initiatives are crucial to protect trade, address debt vulnerabilities, ensure price stability, and tackle climate change. For the longer term, the World Bank argues that to put development goals on track, interventions that mitigate the impact of conflicts, lift human capital, bolster labour force inclusion, enhance macroeconomic stability and confront food insecurity will be critical.
