LNG mgt an ‘enviable challenge’

PAPUA New Guinea has the enviable challenge of managing a sizeable resource boom, according to ANZ Economic Market Research for Pacific.
 “Indeed, the game has already begun,” Paul Gruenwald, the ANZ chief economist for Asia Pacific who contributed in the research, said. 
“If managed prudently, this boom has the potential to significantly raise incomes and living standards and propel PNG into the ranks of middle income economies.
“Many developing countries have managed such booms well (Botswana with diamonds, Chile with copper), whilst others have not (Nigeria with oil).
“A good outcome for PNG would be a period of high growth, moderate inflation, a large and growing sovereign wealth fund and steadily rising living standards.
“A disappointing outcome would be a burst of high growth and inflation with minimal lasting economic and social improvement,” Gruenwald added.
The research said there was  a definite buzz in the air as PNG ramped up for the much-awaited LNG mega-project.
In addition to construction activity, consumption is being brought forward, spurring a robust domestic demand story.
This adds up to possibly very high gross domestic product (GDP) growth, but weak infrastructure and human capital imply bottlenecks and therefore possibly very high inflation as well.
“How should this ‘good problem’ be handled by the authorities? A key medium-term challenge is to shift out the country’s supply curve,” the research quoted Gruenwald.
He said a recent visit to PNG revealed a booming economy.