major macro economic indicators
|2017||2018||2019 (e)||2020 (f)|
|GDP growth (%)||3.1||3.6||6.6||5.9|
|Inflation (yearly average, %)||2.3||3.1||2.2||2.8|
|Budget balance (% GDP)||0.0||3.3||0.1||0.4|
|Current account balance (% GDP)||-14.4||-18.4||-13.7||-20.1|
|Public debt (% GDP)||95.9||102.3||97.8||97.4|
(e): Estimate. (f): Forecast.
- Supported by donors and international organisations
- Rich in minerals (iron, gold, copper) and fishery resources
- Energy potential (gas, renewables)
- Poor governance, high corruption
- Under-diversified economy is vulnerable to commodity price fluctuations
- Growth not very inclusive, with high unemployment
- Small formal economy
- Very little arable land
- Persistent community tensions
Solid and promising growth
GDP will continue to grow rapidly in 2020, driven by the strength of the mining sector and the rest of the economy, as well as by an acceleration in investment. Gold production (25% of exports) will continue to increase, thanks to high prices and the recent expansion of the Tasiast mine, while other mining projects are in the works. Iron ore mining will also increase, providing 30% of exports, even though prices are expected to decline in coming years, partly due to softer Chinese demand. In addition, future development of an enormous natural gas field opens up bright new prospects, with the Grande Tortue Ahmeyim (GTA) offshore platform set to be operational at the end of 2021. Apart from generating significant revenues for the government (estimated at 8% of 2019 GDP each year), this project will mean a boom in FDI from 2020 onwards (when FDI will be equivalent to 18% of GDP). This will further add to the momentum of the construction sector, which is already growing vigorously, notably in connection with the projects to extend the port infrastructure at Nouakchott and Nouadhibou. Public investment (12% of GDP) will remain high, especially in infrastructure, and will benefit from international aid, particularly from the World Bank (USD 500 million for the 2018/2023 period, mainly in grants) and the Islamic Development Bank. In addition, agriculture, and especially fisheries (more than 40% of exports), will once again make a significant contribution to growth. Fishing activity is benefiting from the recent signature of an agreement with Senegal, which provides a framework for development of the resource in Mauritanian waters. However, unequal distribution of the benefits of growth, in a context of high poverty, will continue to be a drag on household consumption.
Inward FDI will finance a widening current account deficit
The budget balance should remain in surplus in 2020. The slight increase in social and investment expenditure is expected to be offset by an increase in income, as a result of continued strong activity and recent tax reforms. The government has made fiscal consolidation efforts, in line with IMF recommendations, in return for an USD 160 million credit facility agreement over the 2017/2020 period. The governance of the tax administration has been improved, the taxpayer register has been cleaned up, while VAT and the cost of fishing licences have been increased. Public debt relief is likely to continue, but debt remains high and vulnerable to exogenous shocks, being almost exclusively external: 86% of the total, including 20% contracted with Kuwait (cancellation negotiations are under way). However, a large portion is composed of concessional loans, which mitigates the risk.
On the external accounts, the massive current account deficit is set to widen further due to a deterioration in the trade deficit. The increase in exports of fish, iron ore and gold will not offset the boom in imports of capital goods needed for extractive activities. At the same time, the increase in imports of services linked to the expansion of these activities will exacerbate the services deficit (11% of GDP in 2019), despite the gradual development of the tourism sector, mainly in the Mauritanian Sahara area. The current account deficit will be financed by a parallel inflow of FDI into extractive activities. This will fuel the foreign exchange reserves, which are growing (they exceeded five months of non-extractive imports in August 2019), and thereby reduce the exchange risk.
First ever transfer of power between two elected presidents
The June 2019 presidential election was won in the first round by Mohamed Ould Cheikh El Ghazouani, a close ally of former President Mohamed Ould Abdel Aziz with no inclination to break with the previous regime. The transfer of power, which the opposition challenged, claiming voting irregularities, followed eleven years of rule by President Aziz, who seized power in a coup in 2008, before organising and winning the 2009 presidential election and being re-elected in 2014. As the constitution prohibits more than two consecutive terms, President Aziz could not run again. The new President inherits a regime marked by authoritarian abuses: President Aziz passed reforms that concentrated power with the executive (a constitutional referendum in 2017, which the opposition boycotted, saw the Senate abolished and replaced by regional councils and a High Council for Fatwa), while one of the main opponents of constitutional reform, Ould Ghadda, was unjustly imprisoned, a move that was criticised by the UN. As a result, the political and social context remains fragile, in a country still plagued by poverty, unemployment, inequality and where slavery, despite being abolished in 1981, continues to be practiced, with at least 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, which has removed trade benefits 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 2020