Mauritius Central Bank Must Focus on Boosting Growth, Industry Group Says

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Central_Bank_MauritiusMauritius must stay focused on boosting economic growth even though inflation is rising, said Raj Makoond, the executive director of the Joint Economic Council, a private industry advisory group.

The country’s central bank faces a “challenging task” when it meets to discuss interest rates next month after prices rose more than expected toward the end of 2010, Makoond said in an interview on Feb. 2 in Port Louis, the capital.

“Growth will still have to be the priority at this point of time,” he said. “The reduction of interest rates showed the need to emphasize growth. Although inflation is picking up, one must see this in the international context.” The economic recovery in Europe is “sluggish” and while the U.S. economy is expanding, growth is fragile, Makoond said.

The Indian Ocean island nation’s economy will expand 4.2 percent this year, the same as in 2010, the country’s statistics agency said on Dec. 31. A debt crisis in the euro zone, which takes about 70 percent of manufactured exports, is the main risk to the outlook. The Bank of Mauritius cut its benchmark rate by one percentage point to 4.75 percent in September and Governor Rundheersing Bheenick warned on Dec. 7 the bank may take “appropriate measures” if inflation accelerates.

Annual inflation climbed to 6.1 percent in December from 3.9 percent a month earlier, higher than Bheenick’s forecast of 5.7 percent by the end of 2010. Gasoline prices increased by 8.5 percent on Jan. 21, according to the State Trading Corporation. The statistics agency will publish January inflation on Feb. 8 and the central bank is due to next meet on interest rates on March 28.

Private industry capital investment will probably rise at a “modest” pace this year because of concerns about the global economic recovery and the affect of the debt crisis in Europe on Mauritius’s economy, Makoond said.

To contact the reporter on this story: Kamlesh Bhuckory in Port Louis via Johannesburg at 1999 or gbell16@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net


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