Demographic Headwinds: The Growth Impacts of Population Ageing in Mauritius

Mauritius faces severe demographic pressures from population ageing, low fertility, and out-migration. Using a growth decomposition framework, this paper finds that demographic factors shifted from supporting growth to weighing on it around 2017 and could reduce annual GDP growth by about 2 percentage points by 2070. Relative to a counterfactual of unchanged demographics, GDP would be nearly 50 percent lower, and GDP per capita about 28 percent lower, by 2070. Higher labor force participation among women, older workers, and youths can partly mitigate these effects and improve debt dynamics, but cannot fully offset the demographic drag. Sustaining growth, living standards, and fiscal sustainability will require labor market reforms alongside broader efforts to raise productivity.