Question

Question 1.

Write a report to explain the impact on Covid- 19 on the foreign exchange trading movement in Mauritius

Answer 1

For the latest forecasts on the economic impacts caused by the coronavirus pandemic, please consult the OECD Economic Outlook Interim Report Coronavirus: the world economy at risk (March 2020) and the IMF's policy tracking platform Policy Responses to COVID-19 for the key economic responses from governments.Mauritius has had low but steady growth rates over the last few years (averaging 3.8% during 2015–19) and is among the most dynamic economies in Sub-Saharan Africa. Growth is estimated to have stabilized at 3.5% of GDP in 2019 – from 3.8% the previous year – fuelled by tourism, financial services, retail and wholesale trade, and ITC sectors. According to the updated IMF forecasts from 14th April 2020, due to the outbreak of the COVID-19, GDP growth is expected to fall to -6.8% in 2020 and pick up to 5.9% in 2021, subject to the post-pandemic global economic recovery.

The island of Mauritius has made substantial progress in its campaign for social equality and poverty reduction, and represents an exemplary model of development. The island is classified as an upper-middle-income country by the World Bank, with a high Human Development Index, and is seeking to become a high-income country within the next 10 years. According to the IMF, GDP per capita (PPP) reached almost USD 25,000 in 2019, the second highest in Africa after the Seychelles. The unemployment rate was estimated at 6.7% in 2019 (ADB), nonetheless female labour participation is significantly low compared to male labour participation and youth unemployment stood at 22.5%. The IMF expects however the unemployment trend to be heavily affected by the negative economic impact of the COVID-19 pandemic, the rate being currently estimated to increase to 17% in 2020 and decrease to 9% in 2021.For Mauritius, its ban on international travel makes its situation worse. Countries like Mauritius that rely on foreign-exchange earnings from tourism to purchase food, medicines, and other basic necessities are likely to find themselves in very difficult positions.

Mauritius’s Foreign Exchange Reserves: % of GDP was reported at 51.887 % in Jun 2020. This records an increase from the previous number of 45.881 % for Mar 2020. Mauritius’s Foreign Exchange Reserves: % of GDP data is updated quarterly, averaging 26.152 % from Dec 2006 to Jun 2020, with 55 observations. The data reached an all-time high of 51.887 % in Jun 2020 .Foreign Exchange Reserves in Mauritius decreased to 7206 USD Million in September from 7268.60 USD Million in August of 2020 due covid -19.The economic recovery from the COVID-19 crisis will not be painless.