Indian Ocean Economic Outlook

Navigating uncertainty in the Indian Ocean economic landscape

The Indian Ocean island economies are facing renewed external pressures as the Middle East conflict drives higher energy costs, inflationary risks and disruptions to tourism and trade. At the same time, these shocks create an opportunity to enhance resilience, by accelerating economic diversification, strengthening energy security and advancing reforms to support long-term competitiveness.

Key highlights of the report

• Economic outlook – External shocks are impacting growth prospects, inflation and fiscal positions across Mauritius, Madagascar, Seychelles and Maldives. Our in-house Macroeconomic Pressure Index quantifies the varying intensity of macroeconomic pressures across the four island economies.
• Tourism and external vulnerabilities – Air connectivity disruptions and higher travel costs are dampening tourist arrivals and exposing structural dependencies.
• Investment and diversification opportunities – New prospects are emerging in sectors such as financial services, blue economy and renewable energy.
• Climate resilience – Climate risks are becoming a defining economic challenge and a growing investment theme for the region.

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