(Updates with central bank comments starting in second paragraph.)
June 14 (Bloomberg) -- Mauritius’s economy will probably expand more than forecast this year as growth in tourism and exports gains momentum, central bank Governor Rundheersing Bheenick said, adding to pressure for higher interest rates.
“We have reason to believe that the country’s economic growth will be above 4.6 percent,” Bheenick told reporters today in Port Louis, the capital. There are “signs of overheating” in the economy and the central bank may need to continue the “process of normalizing rates,” he said.
The comments come a day after the Bank of Mauritius increased its benchmark rate by a quarter of a percentage point to 5.5 percent to curb inflation, which at 7.1 percent, is near its highest level in more than two years. The economic recovery is “taking hold,” it said in a statement on its website yesterday. The rate increase was the second in the last two quarterly policy meetings.
The central bank in March forecast the Indian Ocean island nation’s economy will grow 4.6 percent in 2011. The Central Statistics Office on March 31 raised its forecast to 4.5 percent from 4.2 percent.
Tourist arrivals are expected to increase to more than 1 million compared with 934,827 visitors in 2010 and export receipts rose to the highest level in more than five years in the first quarter, Bheenick said.
“Exports are more than buoyant,” he said. “The order books are full.”
Inflation to Slow
Credit to the private sector jumped 11 percent in March compared with a year earlier, First Deputy Governor Yandraduth Googoolye said.
Inflation will probably slow to 5.1 percent by year-end, Bheenick said. Inflation accelerated to 7.2 percent in March, the highest rate in more than two years, from 2.5 percent in September, according to the statistics office.
Mauritius earns most of its foreign currency from tourism, and exports of sugar, clothing and textiles. About two thirds of tourists to the island are from Europe, the statistics office said on May 19.
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