PNG growth helped region

PAPUA New Guinea’s high economic growth with that of Timor-Leste has helped the Pacific region to defy the economic pains felt in the developed Western economies, according to Zacks Investment Research.
PNG and Timor-Leste were expected to register a 10% growth in gross domestic product.
The PNG Treasury Department projected the growth rate at 10% for the non-mining sector.
Despite being a small contributor to global output (1.7% last year), the Pacific countries anchored by Australia and New Zealand appear to be defying the economic pain of the developed West.
The region of 16 countries expected to record a GDP growth rate of 5% to 6% this year.
“Although Australia and New Zealand average a growth rate of 2% between them, Timor-Leste and PNG expect to register 10% this year. The region’s growth rate for next year is estimated to be lower at around 4%,” Zacks said.
“This is significant in view of IMF’s indication that it may have to trim its growth forecast for the world in January.
“Last September, IMF projected a global growth rate of 4% for next year compared to over 5% last year.
“The global GDP growth rate this year is also estimated to be around 4.0%. Global financial turmoil and the crisis in Europe, largely responsible for sluggish global growth, have prompted the IMF to re-visit the growth estimates.
“Australia and New Zealand form the fulcrum and power the region. These two countries, which are miles ahead on the development curve and significantly larger than the minnows in the region, also have a developed services sector.
“However, commodities and tourism continue to be the mainstay of the smaller economies of the region,” it said.
Australia (minerals), PNG (minerals), Fiji (minerals) and Timor-Leste (petroleum) were riding the commodity boom essentially fuelled by strong Asian demand.
But Australia was hurt by the floods in Queensland, where miners Rio Tinto, BHP Billiton, Xstrata and Vale SA had major operations. However, with the region’s trading partners finding the going tough, sustaining the growth momentum looks difficult next year.
“These smaller countries have underdeve­loped financial systems, high inflation and are largely one-sector eco­nomies.
“However, they appear to be funding their economic needs principally from internal resources and have therefore been able to escape the economic contagion raging across the world.
“Perhaps, being small and self-reliant helps in troubled times,” Zacks said.