New Mauritius governor optimistic on economy

Post was last updated: January 31, 2018

Inflation expectations in Mauritius are contained for now, leaving room for the central bank to stick to its accommodative stance to support economic growth, Governor Yandraduth Googoolye said as he prepares to chair his first Monetary Policy Committee meeting next month.

The pick-up in the average rate of price growth in the 12 months through December was due to temporary supply constraints and the low base of 2016, Googoolye, who began his term as governor on January 15, said in an emailed response to questions. The core inflation rate, which excludes food and mortgage costs, more than doubled in the period from June to December.

“Although core inflation measures increased, we view that they have been broadly stable and contained,” he said. The central bank will focus on reducing the difference between price growth in Mauritius and its major trading partners “and ensure that our policies are geared towards supporting the competitiveness of the Mauritian economy,” he said.

Mauritius’s $14 billion economy is grappling with higher food prices after heavy rains damaged crops, forcing the country to import. The Bank of Mauritius’s Monetary Policy Committee meets February 28 to decide its next move on interest rates after cutting the benchmark gauge by 1.15 percentage points over the past three years to a record low of 3.5 percent.

The most recent cut of 50 basis points was unanimously decided on September 6 to stimulate more investment in the Mauritian economy, the MPC said at the time.

Ethiopia’s fast-growing economy has Asian investors lining up to build a new $4 billion oil refinery, even as a Blackstone Group LP-backed fuel pipeline project is shelved.

Half of the refinery’s output would be directed to the Ethiopian market, with the remainder exported to neighboring countries in East Africa, according to Zemedeneh. Fairfax Africa has plans to eventually double the plant’s capacity amid industrial expansion and increased demand for motor vehicles.

Ethiopia recorded annual average economic growth of about 10 percent over the past decade, and the International Monetary Fund estimates expansion at 8.5 percent in the current fiscal year.

There has also been interest from a US financial firm in a project in which the Ethiopian government would be the sole fuel distributor, Zemedeneh said.—Bloomberg

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