Friday, May 11, 2012

PNG to lead Pacific growth in 2012

Papua New Guinea is again expected to lead Pacific islands growth in 2012 at 7.8%, according to United Nations resident coordinator David McLachlan-Karr, The National reports.
He said at yesterday’s launch of the UN’s Economic and Social Survey of Asia and the Pacific 2012 that this would be boosted by rising commodity prices and growth in domestic demand, coupled with acceleration in investment through the LNG project and several mining projects.

United Nations resident coordinator David McLachlan-Karr (left) presents a copy of the report to Bank of PNG deputy governor Benny Popoitai.-Nationalpic by MALUM NALU
PNG was a star performer with an 8.9% gross domestic product (GDP) growth in 2011 (7.1% growth in 2010), with the economy benefitting from higher commodity prices as a result of a strong demand for oil, gold, copper, coffee, cocoa, palm oil and the PNG LNG project.
“One factor that could affect PNG’s growth prospect is movements in the prices of primary commodities and oil products,” McLachlan-Karr said
“While some countries with rich natural resources such as PNG and Solomon Islands have benefitted from rising commodity prices, their economies remain fragile due to wide price volatility.
“One key challenge to PNG is to manage the resource boom well so that rapid economic expansion does not translate into continuously high inflation.
“It is encouraging that PNG has taken steps to set up the government’s new sovereign wealth fund (SWF) to invest revenue earned from resources for future generations.”
McLachlan-Karr also suggested that PNG and other Pacific governments:

• Devise appropriate social protection policies to protect the poor;

• Diversify to agriculture;

• Improve infrastructure for rural agricultural production and marketing and put more effort into address often-binding constraints to agriculture such as land tenure, high labour costs and marketing infrastructure;

• Introduce initiatives to address increasing unemployment levels, especially among the youth; and

• Address urbanisation issues such as good governance, urban-rural development linkages, housing and related services infrastructure, and ways to deal with natural disasters resulting from climate change.

Bank of PNG deputy governor Benny Popoitai gave an update of the PNG economy, the problems the country was facing, and what the bank was doing to remedy these.
The 2012 Economic and Social Survey of Asia and the Pacific identifies major risks but also presents analysis to inform policy agendas for shared and sustainable growth.
It is produced by ESCAP, the United Nations Economic and Social Commission for Asia and the Pacific.

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