The Asia Miner

JUL-SEP 2019

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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the asia miner • volume 16 • issue 3 13 REGIONAL FOCUS: PNG & South Pacific The World Bank released its February 2019 ediঞon of the PNG Economic Update: Slower Growth, Beer Prospects which outlined Papua New Guinea's economic situaঞon and medium-term development prospects. The report stated that the country's medium-term economic are approved, and that real GDP growth was forecast to rebound this year as major mineral and petroleum export projects return to full producঞon following the 2018 earthquake. The report further found that jobs in the extracঞves sector conঞnued to grow in 2018, while overall employment in other sectors fell. The report, second in a series, was launched in Port Moresby, providing an in-depth analysis of PNG's economy, together with a special focus on developing PNG's private sector as an engine of inclusive growth and jobs creaঞon. "Papua New Guinea has dealt with numerous challenges over the past year, not least the February 2018 earthquake that had a devastaঞng impact on so many lives and the economy," said Patricia Veevers-Carter, World Bank Country Manager for Papua New Guinea. "To reduce the vulnerability of the economy to natural disasters and commodity price shocks, the government should conঞnue to facilitate broad-based, inclusive, and sustainable development by focusing on building PNG's human capital – through quality educaঞon and health investments – and strengthening the business environment to drive increased private sector development." Preliminary esঞmates suggest that real GDP growth slowed from 2.8 per cent in 2017 to 0.3 per cent in 2018, following a contracঞon in the extracঞve sector due to the February 2018 earthquake. This stands in contrast with the growth projecঞon of 2.5 per cent for 2018 made prior to the earthquake. Real GDP growth is forecast to rebound to 5.1 per cent in 2019, primarily driven by an expected return to full annual producঞon in the extracঞves sector. Non-extracঞve sector acঞvity is expected to conঞnue expanding, with beer investor confidence supported by improved access to foreign exchange (FX). In the coming years, growth is esঞmated to hover at about three to four percent per year, unঞl planned investments in new gas and mining projects kick in and improve PNG's growth potenঞal. Ongoing reforms to strengthen PNG's monetary and exchange rate policies are expected to improve business confidence and increase private investment and growth in PNG's non-resource economy. Measures include addressing the shortage of FX, managing the liquidity effects of the use of FX to clear a backlog of orders, working on greater exchange rate flexibility, considering opঞons for strengthening the interest-rate transmission mechanism, and enhancing modelling capacity in the central bank. The Papua New Guinea Economic Update also includes an in-depth analysis on the need for more private sector development to meet the employment needs of PNG's rapidly- growing working-age populaঞon, and ensuring more inclusive PNG on way to economic recovery post 2018 earthquake World Bank: New large-scale resource projects could boost PNG's real GDP to five per cent

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