PNG investments boost growths in Pacific region

 THE Pacific was the fastest growing sub region in 2012, with natural resource investments in Papua New Guinea boosting the overall growth rate to 7.3%.

Asian Development Bank said this when it released its annual Asian Development Outlook (ADO) revealing a varied picture for the economies of the Pacific region.

According to the ADO, Pacific economic growth will be slowing in 2013 from its rapid pace last year.

Growth in the Pacific is expected to slow to 5.2% in 2013 before rising slightly to 5.5% in 2014. 

It says a fall in growth in PNG is a significant development for the region as a whole, and some of the smaller economies are slowing down.

The report stated that government spending is said to be the main engine of growth in Fiji and Solomon Islands has to look for alternatives outside logging.

As for PNG, until the completion of construction on the PNG LNG project, the country should expect slower economic activity until gas exports commence at the end of 2014. 

Timor-Leste will continue its double-digit growth led by oil and gas.

The growth outlook for the rest of the subregion is mixed. 

Inflation in the Pacific is expected to increase to 6.1% in 2013 and 6.3% in 2014 from 5.3% in 2012, despite forecast softness in international food and fuel prices. 

Again, developments are largely driven by PNG, where inflation is forecast to rise in both 2013 and 2014 on high government spending and rising local prices for imports.