(RTTNews) - The Mauritius economy was projected to decelerate to 4% growth or less in 2008/09, the IMF said. This was less than the earlier estimates of 6% growth projected for the year and much less than the 6.6% growth achieved in 2007/08. The rapidly changing external environment was the main reasons for the slow down. The current account deficit was likely to remain unchanged in 2008/09.Lower demand for textiles, tourism and offshore investment services are expected to be offset by lower imports due to lower commodity prices.

Manufacturing industry was projected to grow 2.1% in 2009,while the construction industry was likely to expand 2.5%, and the transportation sector was likely to grow 6%. The overall fiscal deficit was brought down to 3.4% of GDP in 2007/08 from 5.6% in 2005/06.Public sector debt was down to 58% of GDP in June 2008, compared to 70% in June 2005.The government aims to reduce the debt further to 50% of GDP by 2013.

The global recession posed downside risks for Mauritius growth, the IMF said. The planned fiscal measures for stimulating the economy should be well targeted and should not jeopardize the hard-won gains in fiscal stability, the IMF pointed out. The authorities should remain vigilant on inflation, while the recent monetary easing was seen as necessary. Further structural reforms, particularly of the parastatal sector were needed to improve economic efficiency and competitiveness, according to the IMF. Steps should be initiated to liberalize domestic trade and to phase out administrated prices. The IMF also called for a targeted safety net, while cutting back on indirect product subsidies.

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