National Uncertainty Hinders Investment

Discussions surrounding the 2026 budget and the questioning of LODEOM tax exemptions are hindering decision-making by companies in Réunion. Nearly two-thirds of business leaders report that this political uncertainty is slowing investment and recruitment.

In the third quarter, the business climate remained stable at 97.5 points, slightly below its historical average, reflecting a general wait-and-see attitude, according to the IEDOM (Overseas Issuing Institute).

On the price front, the situation is improving. Inflation fell to 1.2% year-on-year, compared to 1.5% at the end of June, and is approaching levels in mainland France. The nearly 9% drop in energy prices is easing household expenses, even though service costs, particularly for healthcare and communications, continue to rise.

The labor market remains rigid. The number of job seekers in category A reached 118,500, with a slight increase over the quarter. Young people under 25 are experiencing the strongest growth, exceeding 4%. Private consumption is also showing signs of weakness: imports of durable and non-durable goods are declining, and debt relief cases have increased by more than 18% year-on-year.

On the business side, the situation varies across sectors. Agriculture and agri-food are maintaining strong activity, even though the sugar campaign has fallen by nearly 40% compared to 2024. Construction and public works are slowing down: the workforce is decreasing for the first time in a year, but building permits are picking up again. Trade is weakening, while local tourism is losing momentum despite a more than 6% increase in air traffic.

In the region, the recovery is progressing more rapidly. Madagascar is recording 4% growth, Mauritius 3.6%, and neighboring economies are continuing their recovery. In this context, Reunion Island remains on a fragile line: the island is waiting for national decisions and the confidence of its economic players to regain a real dynamic.