S - iedom

Exp
press n
note
No. 109 - July 2011
2
2010
O
Outloo
ok forr Reun
nion
S
STRUCT
TURAL CHARA
ACTERIISTICS
Conttextual da
ata
P
O
R
T
R
A
I
T
Administrativve capital
Surface area
Geographicall location
Languages sp
poken
Currency
Status
ank (2007)
Global HDI ra
National reprresentation
State represe
entation
Sain
nt-Denis
2,520 km²
India
an Ocean, the Mascarene Isla
ands, 9,180 km
m from Paris, 210 km from Po
ort Louis
French
h and Reunion
n Creole
Euro
O
Overseas
Department and Re
egion (DROM)) and ultra-perripheral region
n (RUP)
32
5 dep
puties and 3 senators
Prefect
From
m Bourbon
n to Reun
nion
A stopover on the Indian Occean trade rou
utes, Reunion has received,, for several ce
enturies, visitss from sailors – Arab,
P
Portuguese,
e
etc.
The Frencch landed the
ere for the firsst time in 163
38, but the island only beccame a full co
olony in
1
1663.
When the French Easst India Comp
pany went ban
nkrupt, the island was boug
ght by the Kin
ng of France in
n 1764.
I had 22,000
It
0 inhabitants, including 18,000 slaves.. At the beginning of the
e nineteenth century the island's
was based on
d
development
o sugar can
ne farming. France
F
boughtt sugarloavess baked in dozens of “facctories”
a
adjoining
colonial propertiess.
The abolitio
T
on of slavery
y on Reunion was declared
d on 20 Dece
ember 1848. The island, with
w
a popula
ation of
1
103,000
inhab
bitants, including 60,000 sla
aves, was giv
ven its currentt name back tthe same yearr. The econom
mic and
s
social
system was reorganissed around th
he concept of "Indentured labour" which,, in practice, is
i still relatively close
t the previou
to
us system of slavery.
s
It was from the en
nd of the fiftie
es that the isla
and really started to flourissh, with
t
the
economy really taking off, the islan
nd seeing pro
ofound chang
ges to infrastrructures and landscapes with
w
the
of facilities (road,
i
improvement
(
air and
d port) and th
he constructio
on of the hyd
droelectric ba
arrage, hospita
als and
s
schools.
An in
nstitution
nal status common to French oversea
as territorries
IIn the departm
mentalisation act of 19 March 1946, Reu
union became
e a French de
epartment as
a well as a Region,
R
f
following
the law of 31 Deccember 1982.. Unlike region
ns in mainland
d France, its tterritorial foottprint covers a single
d
department
a
and
it has exxtended powe
ers, in particu
ular in matters of local public financess where the Region
d
determines
th
he bases, ratess, exemptionss and the distribution of do
ock duty. The constitutionall reform of 28
8 March
2
2003
confirme
ed this dual institutional fo
ooting, creating the name of “Oversea
as Departme
ents and Re
egions”
(
(DROM).
Reunion also became an ultra-periphe
R
eral region (R
RUP) in 1997. The RUP sysstem envisage
es the applicab
bility of
a communityy law. Under French law, certain adapttations to com
all
mmunity law may be auth
horised in respect of
“special chara
acteristics and
d constraints of ultra-periphe
eral regions". Within this fraamework, the department benefits
b
f
from
financial support as part
p
of the EU
U's regional po
olicy and its "convergence" objective wh
hich seeks to support
s
t structural development of the least developed regio
the
ons in the Uniion.
CO
ONTINU
UED DEMOGRA
APHIC TRANS
T
SITION
The
e result of migratory
m
move
ements from Europe, Africca, India,
China and islands in the India
an Ocean, the population off Reunion
m
multicu
ultural and mu
ulti faith. Reunion is continuing with
is mixed,
its demographic transition, wh
hich began in
n the 30s, witth a birth
e notably high
her than that of mainland France.
F
The population
p
rate
of Reunion
R
thus reached 833,,500 inhabitan
nts on 1 Janua
ary 2010,
that is to say a 2.5
2 times increase in 50 ye
ears. Populatio
on growth
n mainly be explained
e
by natural grow
wth. Neverthe
eless, the
can
gro
owth rate in the
t
number of
o inhabitantss on the islan
nd, which
stan
nds at +1.5%
%, continues to
t show slightt signs of slow
wing. The
pop
pulation of Re
eunion could pass the syymbolic thresh
hold of a
milllion inhabitan
nts by around 2030, according to the central
hyp
pothesis of dem
mographic pro
ojections carrie
ed out by the INSEE.
1 200 000
Population of
o Reunion since
e 1950
(pro
ojection on dotted
d line according to
o 2010 central
scenario)
1 000 000
800 000
600 000
400 000
200 000
0
1950
1960
1970
1980
1990
2000
2010
0
2020
2030
20
040
So
ource: Insee (Censuss; pop. estimates at 1 January; projection
ns )
TH
HE OUTLOOK FOR
F
THE ECON
NOMY
The economy of Reunion
R
is nota
able for its dyynamic growth. Between 199
97 and 2007 GDP
G
almost do
oubled with a growth rate of
o 5%
m
driver of growth, final consumption has grown an
n average of 6%
6 a year. An
nother
on average a yearr, at constant prices. The main
er of growth, investment ha
as tripled in a decade, accelerating since 2003 thankks to fiscal me
easures suppo
orting the economy
drive
and the implemen
ntation of large
e projects to stimulate
s
the Building
B
and Public
P
Works sector
s
(+ 14 % on average between 2003
3 and
2007
7). Growth has thus allowed
d Reunion to partly catch up
u with France
e itself, with an
a almost 10 point rise in GDP
G
per inhab
bitant
over 10 years, alth
hough this rep
presents just 60%
6
of the ratte nationwide. On 2010, Re
eunion’s GDP e
expressed in a constant currrency
able (- 0.2 %)), after a 2.7%
% fall in 2009. It increased 2.3%
2
in value..
basiss remained sta
Modera
ate price hikes
h
sinc
ce 2005
Comparativ
ve ILO year on yea
ar changes
Sourcce: Insee
La Réunion
Métropole
es were moderate betwee
en 2005 and 2010 in Reu
union (+ 1.8 % on
Price hike
average a year), alth
hough greate
er than that observed on
n a national level
e growth of the
t
consumerr price index follows chang
ges in
(+ 1.5%). The average
"
the
e main component of the index, and “foodstuffs”, which has
prices of "services",
experiencced high incre
eases. Converrsely, prices for oil products are subje
ect to
significantt fluctuations,, but contributte little to gen
neral price risses over the period
p
as a whole. Price risess in 2010 rem
mained measurred, despite being
b
more no
otable
009: + 2.2 % annual averag
ge after + 0.3
3 %.
than in 20
Unemploy
yment according to the ILO
Imbalance of
o the labo
our mark
ket
Reun
nion is the seccond most dyn
namic French region in term
ms of job creattion,
with the total nu
umber of jobss on the isla
and growing 2.9% a yearr on
age between 2005 and 20
008 (compare
ed with 2.9% for France as
a a
avera
wholle). Just over nine jobs in te
en are salaried
d jobs. Over tw
wo thirds of th
hese
salarried jobs are in the servicess sector. Non market servicces make up most
m
jobs,, but this sharre is tending to
o fall.
Desp
pite this dynam
mism, unemployment has re
emained notably higher tha
an in
main
nland France (20 points more on ave
erage over th
he last decade).
Neve
ertheless, the number of ca
ategory A job seekers fell until
u
2007 whe
en it
bega
an to grow, tottalling 113,200 job seekers at the end of 2010.
Labour marke
et in Reunion
120 000
90 000
60 000
30 000
2005
2006
20
007
2008
Job seekers
(DEFM(D
c A)cat.A)
cat.
De
emande
d'emplois
DEFM
2009
2010
Job offers
Offres
d'emplois
R
Réunion
France métropolitaine
Source: INSEE
I
- Job Survey
Sou
urce: INSEE – Job Su
urvey
Total jobs
Total jobs
Unsalarie
ed jobs
Salaried jobs
j
Agriculture
e
Industries
Building/pu
ublic works
Commerce
e
Market serrvices
Non marke
et services
2000
188 893
21 347
167 546
3 106
12 769
9 682
22 431
36 355
83 203
2008
2
(p)
246 928
20 201
226 727
2 679
16 599
19 479
30 310
66 394
91 266
vol. (1)
Ev
3.4%
--0.7%
3.9%
-1.8%
3.3%
9.1%
3.8%
7.8%
1.2%
(p) provisionall; (1) Average chaange per year souurce: Insee
Sou
urce: Pôle emploi - Dares
D
Source: Insee
A trade
e gap suffe
ering from
m a structtural defiicit
Like other oversea
as territories and
a most islan
nd economies, the economy
y of Reunion largely depen
nds on importss for its supplies of
ds and raw ma
aterials, which
h leads to a tra
ade gap suffering from a sttructural deficiit. The island mainly exports sugar and fiishing
good
products, other exxports mainly being re-expo
orted productss. Also, mainla
and France is by fair the ma
ain supplier an
nd customer of
o the
island.
The main customers
c
in 20
010 (in millions of
Euros)
The main
n suppliers in 20
010 (in millions
s of Euros)
France
France
Singapore
Mayotte
Spain
China
Madagascar
Germany
Unitted Kingdom
Hong-Kong
South Africa
Vietnam
Japan
Italy
Sourc
rce : Customs
0
500
1 000
1 500
Impo
orts in value (in
( millions of Euros)
Agricultural and fishiing products
Interm
mediate goods
Oil prroducts and hyd
drocarbons
Transsport equipmentt
Agri-ffood products
Electrrical, electronic and computer products
p
Day to
t day products for householdss
Total
2 000
0
2 500
201
10
9
91.6
47
77.3
52
21.8
52
29.6
65
52.8
83
34.4
92
20.9
4,028.3
Source
ce: Customs
20
40
60
80
100
Imports in va
alue (in million
ns of Euros)
Agricultural and
d fishing produccts
Intermediate go
oods
Oil products and hydrocarbonss
Industrial and household
h
waste
e
Electrical produ
ucts and transpo
ort equipment
Agri-food produ
ucts*
2010
2
4.9
12.0
13.0
28.1
86.9
236.3
o/w sugar
97.7
Total
3
381.0
Source: Customs
TH
HE MAIN
N BUSIINESS SECTOR
S
RS
The structure of Reunion’s
R
econ
nomy is characcterised by the
e preponderan
nce of services, whether ma
arket or non market.
m
In term
ms of
ed value, the market
m
service
es sector beca
ame the leadin
ng economic sector
s
of the island in 2007
7, ahead of no
on market servvices,
adde
whicch nevertheless remains the leading employer sector.
Ma
ain sectoral ind
dicators
2010
Agrricultural producction (in millionss of Euros)
378.4
Sug
gar cane producction (in thousan
nds of tonnes)
1 877
Sug
gar production (in
( thousands off tonnes)
206.8
Pou
ultry, pork and bovine
b
products (in
( carcass equi. tonnes)
t
21 858
Fish
hing products exxports (in millions of Euros)
58.3
Building/ Public wo
orks workforce (at
( end Dec.)
16 785
Elecctrical compliance declarations by Consuel
7 378
1
Ave
verage annual grow
wth rate
Sou
urce: Customs, Con
onsuel, Daaf, eRcaane
2010/
20001
0.8%
0.3%
0.2%
-0.1%
3.5%
2.4%
0.4%
2010
Cement
C
imports (tonnes)
376.3
LBU
L
amount (in millions of Euro
os)
.
Number
N
of tourissts
420 300
Hotel
H
capacity (n
number of room
ms)
2 156
Number
N
of airpo
ort passengers (in thousands)
2 090
Number
N
of healtth professionals
11 036
Number
N
of schoo
olchildren (public and private) 240 444
1
Average
A
annual growth
g
rate; 22002
2 and 2010
Source:
S
Local educcation authority, D
DRESS, CCIR, Inse
ee, IRT,
Cu
ustoms, Cer BTP
10/
201
200
001
2.1%2
1
1.2%
-0
0.2%
-2
2.5%
3
3.4%
6
6.0%
0
0.4%
A modern and focussed sugar industry
Sugar cane has forged Reunion's identity. Today, the sugar industry has modernised and focussed on two sugar refineries (Bois
Rouge and Le Gol). The department has produced an average of 200,000 tonnes of sugar a year over the last ten years, which
remains below the quotas allocated (338,000 tonnes). Making up a third of exported goods, sugar represents the main source of
goods exported from the island. The 2010 campaign saw a stabilisation of sugar production, very slightly less than that of 2009 but
still above the ten yearly average (+3.1%).
A highly dynamic Building and Public works sector before a slump in business
since 2009
Building and Public Works TO and Public procurement
(in millions of Euros)
2000
Building and Public works have been a driver of the island’s economic
development over recent years. Between 2002 and 2007, the sector’s added
1500
value grew at the average rate of 16.1% a year. Furthermore, it employs just
1000
over 15,000 people in 2009, that is to say 12% of private salaried employees.
500
From the middle of 2008, Building and Public works activity has seen a clear
decline. The tightening up of access to credit and the clear slowdown in
0
property demand, fed by uncertainties springing from the law on the
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
economic development of overseas territories, has resulted in a contraction
Chiffre d'affaires
Commande publique
of the sale of new builds. At the same time, the completion of large scale
Source: Cer BTP
Turnover
Public procurement
projects (Route des Tamarins, etc.) and the abandonment or postponement
of numerous projects by municipalities has meant that business in the sector has contracted significantly. In 2010 the situation in
the Building and Public works sector deteriorated further, but some positive signs were observed at the end of the year.
Tourism highly dependent on residents
Tourism by purpose of stay
420 000
The tourist sector represents the island’s main source of exports. Tourist
spending in Reunion (o/w over half is by local customers) represents only
2.6% of the total added value of the department, but the labour intensive
nature of the sector makes it a significant driver of jobs, with 9,000 direct
jobs. In 2010 Reunion welcomed 420,300 non resident tourists, in other
words visitor rates approaching those of its best years.
315 000
210 000
105 000
0
2005
Source : Insee/IRT
2006
Affinitaires
Holidays
2007
2008
2009
2010
Agrément
Affaires
Autres
Visits to
families/
friends
Business
tourism
Other
FINANCING OF THE ECONOMY
18 000
Credits granted by all credit
establishments (in millions of Euros)
16 000
14 000
12 000
The credit market in Reunion remains fairly concentrated. In 2010 there were ten
banks and eleven financial companies subject to banking regulations established
in the department, as well as four specialist financial institutions. The level of
amenities in term of bank tellers and ATMs has improved greatly over recent
years, although remaining lower than the national level. This situation does not
nevertheless imply lesser access to banking services, due to the high
concentration of the population in coastal zones.
Support by credit establishments for the dynamism of the economy in Reunion
has taken the form of strong growth in loans granted to economic players as a
whole (+8.7% on average a year between 2000 and 2008). The economic crisis
2000
2002
2004
2006
2008
2010
has, since then, slowed this growth in credit and caused an increase in risks
Source: IEDOM
(6.2% of all loans in 2010). Finally, the locally established banking system grants
more credits than it receives deposits, which causes a structural burden on the refinancing conditions of local banks, and therefore
on the cost of credit.
10 000
8 000
Business Indicators
Bank credit facilities 1 (in millions of Euros, at end of Dec.)
o/w operating credits (in %)
o/w investment credits (in %)
o/w construction credit (in %)
14.8
45.1
39.2
Average cost of business loans (in %, Jan. 2011)
Net bad debts (in millions of Euros)
Financial assets2 (in millions of Euros, at end of Dec.)
1
2
credit facilities with all credit establishments
with local credit establishments
Source: IEDOM
2010
7 364
4.57
294.0
2 399
Household indicators
Bank credit facilities1 (in millions of Euros, at end of Dec.)
o/w consumer credit (in %)
o/w housing credit (in %)
Net bad debts (in millions of Euros)
Financial assets2 (in millions of Euros, at end of Dec.)
o/w long term savings (in millions of Euros)
Number of overindebtedness cases
1
2
credit facilities with all credit establishments
with local credit establishments
Source: IEDOM
All IEDOM publications are accessible and may be downloaded free of charge from www.iedom.fr
Publication Director: N. de SEZE – Editor in Chief: A. BELLAMY-BROWN
Publisher and Printer: IEDOM
Print date: 26 July 2011 – Legal Deposit: July 2011 – ISSN 1952-9619
2010
6 552
24.9
75.0
109.8
7 657
3 340
1 147