Mauritius has long been seen as one of Africa’s most remarkable economic success stories. Over five decades, it transformed itself from a low-income sugar economy into an upper-middle-income country powered by tourism, financial services, manufacturing and fisheries. Growth averaged about 4.5 percent a year, poverty fell sharply, and living standards improved dramatically.
But a new Country Climate and Development Report by the World Bank Group, supported by research from institutions including Industrial Economics Incorporated, the University of British Columbia and the Climate Change Knowledge Portal team, warns that Mauritius has reached a turning point. The country’s traditional growth model is slowing just as climate change is increasing economic risks.
Public debt rose sharply after the COVID-19 pandemic and now stands close to 90 percent of GDP. Investment and productivity growth have weakened, and exports face tougher competition. At the same time, as a small island developing state, Mauritius is highly dependent on imports, tourism, and global markets. Climate change is now adding another layer of pressure.
Climate Risks Are Rising Fast
Mauritius is already feeling the effects of a changing climate. Rainfall has declined over the past decades and is expected to fall further by 2050. Hot days are becoming more frequent. Sea levels are rising, causing beach erosion and threatening coastal infrastructure. Ocean temperatures are increasing, damaging coral reefs that are central to the country’s tourism appeal.
Cyclones and flash floods regularly cause heavy damage. According to the report’s modeling, climate change could reduce GDP by up to 4 percent by 2050 if no additional action is taken. In a worst-case scenario where a tourism slump, global price spikes and a severe cyclone happen close together, GDP could drop by 10 percent in a single year.
Water scarcity is one of the most urgent concerns. Mauritius captures only a small portion of its rainfall due to limited storage capacity and major water losses in aging infrastructure. By 2030, the country is projected to become water-scarce, affecting households, tourism and agriculture alike.
Tourism and Energy: Risk and Opportunity
Tourism contributes about one-fifth of Mauritius’ GDP. The country’s beaches and coral reefs attract more than a million visitors each year. But rising temperatures and reef damage could reduce leisure tourism significantly in the coming decades.
Instead of focusing only on increasing visitor numbers, the report recommends shifting to higher-value, lower-impact tourism. That means promoting eco-tourism, cultural experiences, inland attractions and green-certified hotels. This approach would reduce pressure on fragile coastal areas while increasing per-visitor income.
Energy reform is another key opportunity. Mauritius still depends heavily on imported fossil fuels for electricity. The government has pledged to generate 60 percent of electricity from renewable sources by 2035 and cut greenhouse gas emissions by 40 percent compared to baseline projections.
Achieving these goals will require substantial investment, but it could lower energy costs, improve energy security and create thousands of new jobs in renewable energy industries.
Reforming the Foundations of Growth
Beyond climate action, the report stresses the need to strengthen the country’s economic foundations. Public finances must be stabilized through careful fiscal reforms to reduce debt and rebuild financial buffers.
Institutions responsible for climate policy need stronger coordination and more resources. Climate considerations should be integrated into public budgeting and investment decisions.
Human capital is equally important. Mauritius faces skills gaps, low female labor force participation and an aging population. Education and training reforms are essential to prepare workers for jobs in renewable energy, sustainable tourism and other emerging sectors.
Opening more sectors to competition and encouraging private investment will also help boost productivity and innovation.
Turning Vulnerability into Strength
The report estimates that Mauritius would need about US$5.6 billion in additional investment between 2026 and 2050 to build a more resilient and sustainable economy. While this is a significant amount, modeling shows that such investments could reduce climate-related economic losses by half, increase GDP beyond business-as-usual levels and create up to 70,000 jobs by 2030.
Financing remains a challenge. The country faces an annual climate finance gap of over US$200 million in the near term. Domestic banks, pension funds and insurance companies could play a bigger role, supported by tools such as green bonds and risk-sharing mechanisms.
Mauritius has successfully reinvented itself before. From sugar plantations to a diversified service economy, it adapted to global change. Today, climate change presents another test.
The message of the report is clear: with bold reforms, smart investment and a strong focus on resilience, Mauritius can turn climate risk into an opportunity for stronger, greener and more inclusive growth.