The Mauritius economy, which is based around four key sectors (tourism, textiles, sugar, and finance) is dominated by services (more than 70% of GDP). Despite diversification efforts aimed at attracting travelers from other countries, the island's economy is heavily reliant on that of European countries, the origin of two-thirds of tourists, many of them French (more than 20%) and British (over 10%). Modest European growth means that tourist numbers are not predicted to rise, especially post-Brexit. As a consequence, activity in the tourism services sector and in construction looks set to be fairly flat. The amendment of provisions in the double taxation agreement agreed with India in May 2016, increasing the tax Indian investors are liable to pay, might be a burden on investment flows, particularly in the financial sector. Exports (sugar, textiles) are forecast to suffer from weak demand in Europe, limiting the contribution foreign trade makes to growth. However, a relatively expansionary budget policy should mitigate the downturn in activity by supporting specific sectors in the framework of an economic diversification program. Inflation might increase due to a slight rise in the price of imported oil, but is expected to remain moderate. Monetary policy should therefore remain loose (interest rate below 4%) and encourage domestic demand.

Budget policy is expected to be relatively expansionary to try to offset the impacts of Brexit on economic activity. The State will likely intervene in the completion of infrastructure projects, particularly in the transport sector, and support the development of new sectors (film industry) as part of its economic diversification program. This rise in spending will probably not be offset by a rise in tax receipts because the State has announced tax cuts, especially for companies, and because the economic slowdown, although small, will probably hold back tax revenues. However, grants, in particular from India, should help to finance some projects. The budget deficit will therefore probably rise a little, but remain under control. Public debt is expected to continue to rise, but the profile of the debt – mostly concessional – greatly reduces the risk of over indebtedness. The current account balance is also expected to deteriorate in 2017. Exports (textiles, sugar) might suffer due to modest demand in Europe (55% of exports, of which 30% go to France and the UK) and a lack of competitiveness in the British market, with the fall in value of sterling. The prices of energy and food products, which form a large proportion of the island's imports, will probably not fall. Infrastructure projects will also require imports of capital goods. Mauritius's financial system is robust and demonstrated its resilience after the collapse of the BAI group in 2015. Capitalization is satisfactory, but the ratio of non-performing loans, although still quite low, is rising (8% in 2016 compared with 5% in 2015). The consequences of Brexit and the changes to the double taxation agreement with India could be a burden on the sector, but should not undermine its stability.

The island of Mauritius is an established democracy. The parliamentary elections of December 2014 saw Sir Anerood Jugnauth (aged 86) return as Prime Minister, having previously occupied the same role in 1982-1995 and 2000-2003, and the role of President (2003-2012). The three-party coalition that he represents, Lepep, has a comfortable majority in parliament. In late 2016, A. Jugnauth announced his decision to step down before the next elections, scheduled for 2019 or 2020. His son Pravind Jugnauth will probably stand to succeed him but does not enjoy unanimous support within Lepep. Dissent within the coalition might slow the implementation of reforms, although it shouldn't threaten political stability. The population have high expectations, given inequality and the rise in employment (7%). Lack of progress in these areas could fuel protest movements. Lastly, Mauritius enjoys effective governance and a favorable business climate. Its governance indicators are among the highest of Sub-Saharan African countries, according to the World Bank.