Papua New Guinea (PNG) has been among the fastest growing economies in the Asia-Pacific region in recent years.
Since 2007, PNG’s gross domestic product (GDP) has been growing at more than 5 percent according to Kina Securities market analysis. The analysis shows that GDP growth has averaged 7.4 percent economic growth annually in the period from 2007 to 2013.
Papua New Guinea is a resource based economy relying on export earnings from crude oil, copper and gold and a range of agricultural products, particularly oil palm, coffee and cocoa.
An outstanding feature of PNG’s economy is that during the 2008 global financial crisis (GFC), the small resource based economy was able to shrug off the effects of GFC that brought larger global economies to their knees as reported by the World Bank Country Report (PNG).
The country’s economic growth according to The Bank of Papua New Guinea quarterly reports slowed to 6. 1 percent in 2009 before reaching a peak of 11. 1 percent in 2011. World Bank also quotes the same figures in their flagship publication, The World Bank Country Report.
Kina Securities analysts note that the economy has been buoyed by the rise in the commodity prices since 2005 and the start of the country’s $19 billion liquefied natural gas (LNG) project led by ExxonMobil and co-venture partners that include the government of PNG.
In what was described by local and overseas media as an historical event, PNG played down all its critics by delivering the first shipment of its LNG cargo to Japan ahead of schedule. The plant is said to export 6.9 million tonnes of LNG annually to utilities in Japan, China and Taiwan.
Forecasts from PNG Treasury are such that LNG exports in 2014 will fetch up to K1.8 billion in export revenue out of the total K14. 9 billion.
Treasury also forecast that the LNG export revenue will rise to K10. 3 billion, taking the total PNG export revenue to K25.5 billion in 2015.
The GDP of the country as a result is forecast to surge by 5 percent next year before slowing to a more normal growth rate.
“It is our view that PNG’s strong economic growth outlook remains intact for the foreseeable future, driven largely by extractive industry sector investment and public sector investments in infrastructures and public service delivery as we reported earlier,’’ the report says.
The non-extractive sectors of the economy continue to see a low growth in term of GDP.
The experts are now calling for the government to balance growth between the mining and non-mining sectors like agriculture, fisheries and forestry to create a broad base economy to sustain the economic growth.
They state: We also note an upsurge in the construction activity which brings increased competition to this segment of the market that has major influence on the economy of the country. The construction segment of the market has recently attracted major players from China, to existing players from Australia, New Zealand, Malaysia and other neighboring counties.