Sunday, November 1, 2009

The Economic Weather Under Federation 2

Sithanen likes repeating something the Prime Minister said in parliament back in April: In 2005 there was no recession, the sea was calm, the sky was blue and the sun was shining. That statement is not quite true as we've demonstrated before.

Indeed in 2005 our textile industry contracted by 14.7% after shrinking by half that amount in 2004. One of the causes of this severe recession in that industry -- about 25,000 people lost their jobs over a 5-year period -- was the expiration of the 30-year old multi fiber agreement. And given the weight of that industry in our economy (8.1% in 2004) its performance in 2005 was negative enough to drag GDP growth by about 1.2%.

Contrast that with the effect of the global recession that started about a year ago. The fact that it didn't affect Mauritius as much as the textile recession shouldn't have surprised us. Our banks have been churning out record profits and unlike in the US our financial system was not on the brink of collapse.

So, what you have to take away from this is that something affecting one of our main industries can be more devastating to us than a global crisis hitting many rich countries.

1 comment:

Sanjay Jagatsingh said...

There were no miracle under Federation 2. So you need to update your odds of one happening with Lepep government.