(Bloomberg) -- Mauritius’s outbound shipments of manufactured goods, a key source of foreign currency for the import-dependent economy, will likely contract for a second straight year, the nation’s export association said, urging a rethink on policy for the industry. 

Exports declined 5.1% to 47.5 billion rupees ($1.02 billion) in 2023 from a year earlier, according to Statistics Mauritius, and the drop signals “potential headwinds for the ongoing year,” Mauritius Export Association Chairman Dominique de Froberville said. 

“Our market survey for the first half of 2024 anticipates an 8.4% decline in exports, with indications pointing toward a continuation of this trend in the second half of the year,” De Froberville said Wednesday in a speech in the capital, Port Louis. 

Mauritius’s manufacturing sector adapted to new pandemic-era market demands, with export revenue climbing to almost 50 billion rupees in 2022, which De Froberville said was a record. Almost half of the Indian Ocean island nation’s revenue from outbound shipments is from manufactured goods, with the bulk of that coming from apparel. Now, a 15% drop in textile and apparel sales is reversing the progress made. 

Consecutive annual contractions in exports reflect the economic situation in countries that are traditionally the biggest buyers of Mauritian goods. 

South Africa, which emerged as the top buyer of so-called Made in Mauritius products during the pandemic, is grappling with power disruptions and low economic expansion. Europe, with buyers in France and the UK, “is experiencing modest growth amid subdued domestic demand and persistent consumer price inflation,” according to De Froberville.

While a return to a growth trajectory is expected from next year, the export-focused manufacturing industry may stagnate, he said. An optimistic forecast for revenue would be in the range of 50 billion to 55 billion rupees, with traditional industries including textiles and seafood accounting for the main share.

“It is evident that our export sector is at a crossroad,” the MEXA chairman said. “To fit in the modernization of our economy, we certainly require a new generation of industrialization built on a new export model.”

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