Bank forecasts higher growth than projected

The Central Bank projects growth for 2018 to be slightly above Treasury’s projection, the bank said yesterday.
The Government revised downwards its real gross domestic product (GDP) growth forecast for 2018 to 1 per cent from 2.4 per cent, according to the bank.
It said in a statement yesterday that the higher-than-anticipated recovery in the production of LNG following the earthquake in February, along with improved prices and production of some of PNG’s major export commodities, contributed to ongoing economic activity during the first half of the year.
“The overall GDP growth is expected to be driven by the non-mineral sector,” it said.
“The improvement in the external sector resulted in relatively high inflows of foreign exchange.
“While recovery in the post-earthquake period has been noteworthy, it may not fully offset the downside impact.”
The bank said high Government expenditure, Apec-related activities and the turnaround in private sector credit would also contribute to growth in economic activity.
“Hosting of Apec is expected to positively impact the economy, increasing business activity and raising the profile of PNG as an investment and tourism destination,” it said.
“The short-term impact may be limited, however, it may have a significant impact on growth in the long-run. PNG’s foreign exchange earnings are significant, as reflected by the high current account surplus and can more than adequately cover all domestic demand for foreign currency. However, the project development agreements allow developers of various extractive industry projects to keep export earnings in foreign currency accounts offshore to meet external liabilities.
“The inflows into the economy are mainly from the agriculture exports, tax revenue, and other sources.
“While there has been an improvement in foreign exchange inflows into the domestic market, the backlog of orders continues to remain high.”