THE Bank of Papua New Guinea (BPNG) has reported that the economy is growing at a slower pace than in recent years.
Real gross domestic product growth sits at around 5 per cent, largely due to the winding down of the construction phase of the PNG LNG project and prolonged low commodity prices, according to new figures.
In a recent Deloitte economic briefing, the advisory firm quoted Bank of PNG Governor Loi Bakani as saying that there had been a decline in the total volume of exports from poor infrastructure and market accessibility.
However import demand has been strong, mainly from the retail, construction, petroleum, manufacturing and finance sectors.
The Governor further added that the combination of these factors has contributed to the depreciation of the Kina in 2013.
According to Deloitte, Mr Bakani stated that while the government aimed to stimulate economic activity in 2014 with its K15 billion budget, the BPNG would be cautiously monitoring sources of inflationary pressures given the increase from 3.2% to 3.5% annual inflation from June to September 2013.
World Bank PNG country economist Tim Bulman also indicated that the economy is expected to grow slower in 2014, noting also that the World Bank believes PNG grew by between 4% and 4.5% in 2013.
Mr Bulman indicated that growth in the non-resources sectors would depend on government efforts to improve the investment climate addressing in particular poor competition, lack of infrastructure, law and order issues and enforcing contract and property rights.
Meanwhile, Deloitte cited the World Bank’s recently released Global Economic Prospects report which projected that global trade would grow from an estimated 3.1% in 2013 to 4.6% this year and 5.1% in 2015 and 2016. The report states that this will be driven by stronger demand from developed economies.
“The implications for developing countries like PNG is that there will be increased demand for commodities which in turn is expected to increase exports,” Deloitte said