major macro economic indicators
|2016||2017||2018 (e)||2019 (f)|
|GDP growth (%)||1.8||3.5||2.5||5.2|
|Inflation (yearly average, %)||1.5||2.3||3.8||3.9|
|Budget balance (% GDP)||0.5||1.2||1.4||1.3|
|Current account balance (% GDP)||-15.0||-14.4||-16.0||-17.2|
|Public debt (% GDP)||99.1||96.5||91.4||90.7|
(e): Estimate. (f): Forecast.
- Supported by donors and international organisations
- Rich in minerals and fisheries resources
- Energy potential (gas, renewables)
- Persistent political and security instability
- Poorly diversified economy, vulnerable to commodity price fluctuations
- Growth not very inclusive, with high unemployment, especially among young people
- Limited formal economy
Bright growth prospects
Growth will rebound across all sectors of activity in 2019. The primary sector – in the shape of agriculture (30% of GDP) and especially fisheries (40% of exports) – will drive growth. As fishing activity is dictated by tensions on the maritime border with Senegal, it may benefit from the recent easing in cross-border relations. Services (40% of GDP) will also add to growth through a revival of tourism in the Adrar area, although whether this continues will depend on the government's ability to guarantee security. Other sectors, including construction, will be driven by public investment, benefitting from international aid, particularly from the World Bank, which is providing USD 500 million between 2018 and 2023. Private investment, concentrated in the mining sector (80% of FDI), could be constrained by uncertainty linked to the 2019 presidential elections. Meanwhile, unfair distribution of growth-related profits in a context of high poverty will continue to dampen household consumption. In the medium-term, the increase in gold and iron mining made possible by expanding existing mines will compensate for the end of oil production. Future production of liquefied natural gas will support growth in the extractive sectors: talks with Senegal have resulted in an agreement on equal distribution of revenues from operating the Grande Tortue Ahmeyim (GTA) offshore platform, planned for 2021.
Fiscal rigour and vulnerability to external shocks
In 2019, the budget balance should remain in surplus, although the surplus will be reduced by increased pre-election spending. The government has made fiscal consolidation efforts in line with IMF recommendations, in return for a USD 160 million credit facility agreement over the 2017-2020 period. Steps have been taken to improve the functioning of the tax administration, as well as to increase VAT and the cost of fishing licences, while allocating expenditure more efficiently by cutting current spending to direct more resources towards investments aimed at promoting economic diversification. Public debt is expected to continue to decline, but remains high and vulnerable to exogenous shocks, being mainly external: 86% of the total, including 20% with Kuwait (negotiations to cancel this debt are underway). The high share of concessional loans from international organisations (61% of the total) mitigates the risk of debt distress.
Turning to the external accounts, the massive current account deficit is expected to widen further due to a deterioration in the trade deficit. Exports of fish, iron ore, and raw gold will grow less rapidly than imports of capital goods and oil, exacerbating. Other current account components will also contribute negatively: the services deficit (9.5% of GDP in 2017) will decrease slightly with growth in tourism, but will be offset by an increase in the income deficit (1.1% of GDP). The current account deficit will be financed by FDI, which will be channelled towards the extractive sectors (10% of GDP), and by concessional loans, preserving the foreign exchange reserves, which remain low (four months of imports in 2017).
A tense pre-election environment
President Mohamed Ould Abdel Aziz, who gained power following a coup d'état in 2008 and was re-elected in 2014 for a second and final term, took advantage of a disorganised opposition to pass reforms concentrating power in the hands of the executive: a constitutional referendum in 2017 saw the Senate abolished and replaced by regional councils and a High Council for Fatwa. The vote, which was boycotted by the opposition, was followed by the imprisonment of Mohamed Ould Ghadda, one of the main opponents of constitutional reform, in a move that was criticised by the UN and that lent support to the notion of an authoritarian shift by the regime. A united opposition finally formed around the National Forum for Democracy and Unity (FNDU), a coalition of eight parties that ran in the 2018 parliamentary elections. The elections were won by the ruling Union for the Republic Party (89 seats out of 157 in the Assembly) and resulted in the appointment of a new prime minister, Mohamed Salem Ould Bechir. The presidential elections, scheduled for June 2019, will not see President Abdel Aziz standing for re-election, in accordance with the constitution. However, the latter has affirmed his willingness to remain active on the political scene and does not exclude the idea of running again in 2024. As a result, the political and social environment remains fragile, in a country still plagued by poverty, unemployment, and inequality, and where slavery, despite being abolished in 1981, continues to be practiced, with 43,000 people, or 1% of the population, reportedly affected.
This last point has led to a deterioration in external relations with the United States, with trade benefits being removed as of 2019 in response to the lack of measures against forced labour and slavery. Moreover, although Mauritania has not been affected by terrorism since 2011, the threat remains given the country’s porous border with Mali.
Last update: February 2019