Mauritius' Chamber of Commerce and Industry raised its growth forecast for the Indian Ocean island economy on Thursday on the back of lower interest rates and a more favourable exchange rate.
It now sees gross domestic product (GDP) growth of 4.5 percent this year, up from its estimate of 4.2 percent made in December that was in line with the government's prediction.
"Economic growth should improve in 2011 compared to 2010, due to the renewed economic dynamism observed in the last quarter of 2010, although the IMF expects a deceleration of global growth in 2011," chamber of commerce economist Renganaden Padayachy told a news conference.
He cited three factors behind the forecast: "The decrease in the repo rates by the Bank of Mauritius in September 2010, positive dynamics of the rupee, and an improved business climate."
Mauritius' Monetary Policy Committee slashed its repo rate by 100 basis points to 4.75 percent in September, warning of the risk of a significant economic slowdown in 2011.
But in a financial stability report this month the central bank said rising inflation posed a risk to economic growth and might bring an end to the cycle of monetary easing.
Mauritius' rupee has gained 5.7 percent against the dollar so far in 2011, easing the pain of rising food and oil costs internationally.
Against the euro, the currency of most of Mauritius' export markets, it has traded fairly steady MUREUR=R.
The chamber of commerce said the favourable rupee dynamics coupled with external factors such as rising production costs in China and political instability in the Middle East could help businesses that are facing global competition.
Separately, Finance Minister Pravind Jugnauth said Foreign Direct Investment (FDI) surpassed the 12 billion rupee ($418 million) mark in 2010, its highest level ever and a 12-fold increase compared with 2000.
Mauritius' Board of Investment says it is targeting a conservative 13 billion rupees worth of inflows this year.
(Editing by Richard Lough)