Economic growth in Mauritius is projected to increase to 5% per year by 2011, the International Monetary Fund (IMF) said in a statement yesterday.

According to the IMF, the medium-term growth forecast remains benign, but there is significant uncertainty because Mauritius' growth prospects depend heavily on the global economy.

Mauritius' economic growth has slowed sharply in the wake of the global financial crisis, but is expected to rebound next year. Output growth slowed from 4.2% in 2008 to less than 2% in 2009 as key drivers of growth (tourism, textiles, and construction) contracted.

The IMF said that the authorities' policy response was commendably prompt and comprehensive, including a fiscal stimulus package of some 5% of Gross Domestic Product (GDP) over the period July 2009 to December 2010. The well-targeted and temporary package is intended to cushion the economy against the impact of the global economic crisis.

The statement further said that the Mauritian banking system has withstood the impact of the global financial turmoil. Banks' conservative business practices, their strong initial balance sheets, and the "Mauritius Approach" — providing temporary financial relief to firms hit by the crisis — have kept the financial system sound. Capital adequacy, liquidity, and profitability of the banking system remain sound, and the system appears resilient.