After a difficult 2024, Reunion Island posted stronger growth of 1.1% in 2025, outpacing mainland France. But behind the encouraging figures, structural fragilities persist — and 2026 is shaping up as a year under pressure.
A Sounder Recovery than 2024
The latest economic indicators paint a mixed picture. GDP grew 1.1% in 2025, up from just 0.5% the previous year and ahead of metropolitan France's 0.8%. Two main drivers fuelled the rebound: public spending (+2.5%) and household consumption (+1.2%). Inflation eased significantly to 1.4% after peaking at 2.8% in 2024, restoring some purchasing power to families.
On the employment front, the situation remains stable but not buoyant: salaried employment rose by +0.4%, while the construction sector contracted by 1.8% — a worrying sign for an industry that is structurally key to the island's economy.
Tourism: The Real Bright Spot
The standout success of 2025 was the tourism rebound. Hotel occupancy rates rose by 5%, with upmarket establishments (4 and 5 stars) seeing a 14% surge in bookings. This recovery reflects growing demand for a destination positioning itself as a premium Indian Ocean getaway. The 2026 challenge will be consolidating these gains in the face of intensifying regional competition — Mauritius and the Seychelles are both doubling down on luxury tourism.
Exports Still Under Pressure
The external picture remains unfavourable. Exports stayed under pressure due to cyclone-hit sugarcane output and declining marine product exports. Imports grew by 3.5%, widening the island's chronic trade deficit. This longstanding vulnerability is one that neither 2025's growth nor the tourism recovery can structurally offset.
2026: Headwinds and Latent Inflation Risks
Economists anticipate a loss of momentum in 2026. International geopolitical and trade uncertainties are weighing on the outlook, while rising fuel costs threaten to reignite inflation. Reunion's dependence on imports — whether food, energy or capital goods — makes it particularly exposed to external shocks. And with national fiscal consolidation underway, the public spending boost that drove much of 2025's growth may not be replicated.
Why It Matters
Reunion Island is the Indian Ocean's most tightly integrated economy into the European system. Its trajectory sets the tone for regional players who export to, invest in, or use it as a gateway to European markets. A confirmed slowdown in 2026 could dampen regional cooperation projects and reduce demand for goods and services from COI partner economies. For decision-makers across the region, watching Reunion's indicators is also a way of anticipating spillover effects on neighbouring economies.