23 Feb 2010

ANZ bank says PNG's economic outlook set to improve

11:27 am on 23 February 2010

The ANZ bank says Papua New Guinea's economic outlook in the coming months looks set to improve as the global economic outlook continues to normalise.

In its country update for this month, the bank reported that gross domestic product growth is expected to rise to 6.5 per cent this year compared with an estimated 5 per cent growth last year.

The Post Courier reports he bank predicts inflation to build up, rising an average 7.3 per cent this year from an estimated 6.7 per cent last year.

It says that inflation momentum had picked up at the same time that private sector employment growth had slowed.

The Bank of Papua New Guinea cut the benchmark kina facility rate by 100 basis points to 7 per cent in December last year citing an improved economic outlook and has indicated that this rate would continue to the end of this month.

ANZ says the central bank is mindful of inflation developments from a weaker exchange rate, strong domestic demand and a fast draw down in the Government's trust accounts.

And it says the Pacific region has begun to recover, particularly in those economies with resource-based exports.