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Business |
Vibrant economy
Economic activities
continued to grow in first half: Kamit
By FRANK ASAELI
ECONOMIC activities
in the country continued to grow in the first six months of the
year, Central Bank Governor Wilson Kamit reported.
Mr Kamit said that the growth reflected the high international
commodity prices, increased government expenditure and lending
to the private sector by commercial banks.
The governor’s statement was carried by Bank of PNG quarterly
economic bulletin for the June quarter.
“As a result of the continued high international export prices,
there were surpluses in the Government’s fiscal operations and
the balance of payments,” Mr Kamit said.
He noted that employment continued to increase in all sectors
and in most regions while lending to all sectors also increased
as a result of low interest rates and confidence by the private
sector.
“The headline inflation rate remained low, although there are
signs of underlying inflationary pressure from the past
depreciation of the kina against the Australian dollar,” Mr
Kamit said.
He had recommended that the Government “should fast track” the
implementation of major development policies contained in the
medium-term development strategy (MTDS).
He also strongly urged the bringing down of barriers to
investments to broaden the economic base and sustain higher
economic growth.
The governor reported that the daily kina exchange rate had
appreciated against the US dollar to US$0.34 as of Sept 20, up
US$0.01 from last year’s US$0.33 in the same period.
The kina has also gained against the Australian dollar since
June to A$0.39 as of Sept 20.
The low annual increase outcome in the June quarter of 2007 can
mainly be credited to the large fall in the price of fruits and
vegetables and betelnut in the first half of the year.
Whilst the headline and trimmed mean increase outcomes were
below the bank’s forecasts as stated in the July 2007 monetary
policy statement, the exclusion-based inflation outcome of 8%
was within the bank’s forecast, Mr Kamit said.
The higher underlying price rise outcome was mainly due to the
decrease of the kina against the Australian dollar, increases in
inflation from PNG’s major trading partners and the lagged
effect of domestic fuel price increases.
The growth reflected the high international commodity prices,
increased Government expenditure and lending to the private
sector by commercial banks.
Among the highlights of Mr Kamit’s report:
1. Higher international prices for mineral, most agricultural
commodities and log exports resulted in a 12.8% rise in the
weighted average kina price of PNG’s exports in the June quarter
as against the same period the previous year.
2. There was a 9.9% rise in the weighted average kina price of
mineral exports, with higher prices for gold, copper and crude
oil; and
3. For the agricultural, forestry and marine product exports,
the weighted average kina price increased by 41.2% and was
attributed to higher kina export prices of coffee, cocoa, palm
oil, copra oil, copra, rubber and logs, which more than offset
declines in export prices of tea and marine products.
Mr Kamit stressed that the overall surplus in the balance of
payments was K400 million for the first six months of this year,
as against a higher surplus of K675 million for the same period
of 2006.
“This outcome was the result of a lower surplus in the current
account, which more than offset an improvement in the capital
and financial accounts,” he stressed.
 
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