At the Prime Minister's Question Time (PMQT) on 29 July 2026, Prime Minister Navin Ramgoolam firmly rejected the stagflation scenario for the Mauritian economy, citing projected growth of 3%, falling inflation and unemployment at its lowest level in sixteen years.
Stagflation: A Real Threat, But Ruled Out
Asked about macroeconomic risks linked to Middle East conflicts and global market instability, Ramgoolam recalled the precise definition of stagflation: "the simultaneous combination of stagnant or declining growth, persistent inflation and rising unemployment." Mauritius does not meet any of these three criteria, he stated before Parliament.
The growth rate expected for 2026 stands at approximately 3%, slightly below the 3.2% recorded in 2025 according to the IMF, but consistent with a deteriorating global environment. The Prime Minister acknowledged that geopolitical tensions represent "a real risk" to growth and import prices, while emphasising the demonstrated resilience of the economy.
Inflation Easing, Unemployment at Its Lowest
After peaking at 10.8% in 2022 — driven by the war in Ukraine and the post-Covid rebound — and then 7% in 2023, inflation has been on a notable downward trajectory in 2026. The IMF confirmed this trend as early as May in its Article IV end-of-mission statement.
On employment, the unemployment rate fell to 5.7% in 2025, from a peak of 9.2% in 2020, with positive trends for both men and women. An indicator the opposition had used to fuel debate about the precariousness of newly created jobs.
Second Half Priorities
The Prime Minister also recalled the broad thrust of the 2026-2027 "Future Ready Economy" budget: creation of an AI-dedicated economic zone at Côte d'Or, enhanced financing schemes for SMEs and startups, manufacturing modernisation, blue economy development, renewable energy transition and international talent recruitment to fill shortages in key sectors.
These orientations echo IMF recommendations from May to "strengthen fiscal space" while protecting productive investment, in a context of global slowdown and prolonged uncertainty.
Why It Matters
The clarity of the government's message at a time when global financial markets are scrutinising emerging economies under pressure is a credibility asset for Mauritius. While several regional countries must renegotiate with creditors, the island displays fundamentals that reassure markets. The real challenge for the second half remains translating these macro indicators into lasting value creation for businesses and households.