GDP growth expected to rebound, says bank

GROSS Domestic Product growth is expected to rebound to around 2.5 per cent this year, according to Kina Bank’s executive general manager for wealth Deepak Gupta.
He painted a positive forecast of the country’s economy for the 2019 financial year at the Prime Minister’s Back-to-Business breakfast in Port Moresby yesterday.
“We see an improving national fiscal situation driven by strong ongoing production and profitability from resource companies, and a resulting improvement of foreign exchange supplies into the market,” he said.
“Combined with improved productivity of government expenditure, and greater efficiency in tax collection, we’re seeing a number of positives that are building and expected to continue.”
Gupta said an improved national fiscal situation would also be driven by stable to moderately decreasing interest rates.
“With potential reductions in the supply of local government debt, combined with ongoing strong investor demand, there is potential for the cost of debt to government to also decrease,” he said.
“We expect to see a gradual decline in interest rates and the net impact of this is to help reduce government financing costs – which in turn, of course, helps the fiscal situation. This will be a virtuous cycle to be in, if we get there.”