Economic impact caused by drought offset by more resource projects

 THE increase in resource projects may help the country to offset implications on the economy caused by drought in the Highlands areas, ANZ says.

South Asia, ASEAN and Pacific chief economist Glenn Maguire said with the Highlands region contributing 80 per cent of the food from the agricultural sector, the drought had greatly impacted the country’s economy.

“Fortunately for Papua New Guinea, every time there is a drought, it normally happens during a commodity or resource boom,” Maguire  told business houses during a breakfast session in Port Moresby yesterday. So that’s been able to offset the slowdown to output the effects from the agricultural sector.

“The agricultural sector accounts for 25 per cent of GDP (gross domestic product) and we have a drought which is intensifying in the Highlands region at this stage. 

“The Highlands region accounts for 80 per cent of food in Papua New Guinea.

Maguire said the drought and drop in global commodity prices were currently challenges of the PNG economy.

“We (ANZ) are actually seeing a double impact occurring in Papua New Guinea at this stage,” he said. 

“From lower commodity revenues but also from lower stock commodity production

“The bottom line is we think that growth is going to stabilise around 4-5 per cent level once we get through this initial period so we are expecting growth to be reasonably high in 2015 around 10 per cent.”