Bakani: Low double-digit growth in sight

WITH less than two months to go, the big question on the PNG economy is whether it will manage to grow by more than 10% in the current year.
Central Bank Governor Loi Bakani, told the recent World Bank-International Monetary Fund meeting in Washington PNG economic growth “could reach low double digit in 2011”.
More recently in PNG, he said, much stronger growth than anticipated meant that the gross domestic growth would increase by more than the previously anticipated 9.5%.
A growth rate of around 10% would make it among the highest in the Asia Pacific region and the best outcome for PNG since the resources boom of the early 1990s.
The anticipated growth will mean 10 consecutive years of economic growth. The initial turnaround occurred after the Somare government took over from then Prime Minister Sir Mekere Morauta and resuscitated the dismal 2002 situation in a remarkable period of just a few months.
This was the longest period of continuous growth since independence in 1975 and follows periods of volatility until 2002.
Although many people had expressed concerns that this growth was not being felt by the bulk of the population, the formal sector, which had been stagnant since independence, had grown by 50% since 2002.
The 10% growth this year would translate to significant jobs growth in contrast with 2009 when jobs growth slowed after the economy only grew by 4.5% due to the global financial crisis.
The PNG LNG project alone currently had 6,600 local workers compared to a maximum of 3,500 projected before construction started last year.
A major feature of the economic recovery since 2002, and more particularly since 2005, had been its widespread nature.
Significant growth had occurred annually in all sectors of the economy, including agriculture, building and construction, retail, wholesale, manufacturing, transportation and financial and other services.
Formal sector jobs in Morobe province had more than doubled in that time frame with significant increases also experienced in all provinces, including the National Capital District.
Exports of gold, copper, and crude oil have risen from K4.8 billion in 2002 to K11.2 billion last year, while exports of agricultural produce have risen from K1.08 billion to K2.96 billion last year.
Despite common perceptions to the contrary, the value of agricultural exports had risen at a slightly faster pace than minerals.
Although commodity prices remained relatively high, there were concerns that problems in the European Union could result in a global recession and affect global growth and commodity prices.
Other major concerns with regards to the PNG economy were the ongoing period of political uncertainty; fears that an expansive 2012 budget could cause inflation to spiral out of control and to cause severe problems to many people.
Most analysts believed that even if a global recession does occur, which neither the World Bank nor the International Monetary Fund were anticipating, PNG growth remained secure with the PNG LNG project scheduled to ramp up construction in the coming two years.
Significant building and construction activity was also underway and several resources projects had reached an advanced stage of planning to help underpin future PNG growth for several more years.