THE Bank of PNG says if prices for some of the country’s main export commodities continue to decline, the country’s export earnings can be affected.
The bank’s November economic review states that if this happens and import demand continues to be strong, it will exert a downward pressure on the kina exchange rate. In last month’s Commodity Market Monthly, the International Monetary Fund also reported a fall in world commodity prices by 5.9 per cent as a result of a sharp drop in oil prices. Crude oil prices plunged by 10.7 per cent, reflecting increased market supply and expectation of continued surplus supply by the Organisation of Petroleum Exporting Countries, following its decision to maintain the 30 million barrels per day production target. Metal prices fell by 0.3 per cent due to a reduced global demand as a result of slowdown in demand from China and other emerging market economies. On the other hand, agriculture prices rose by 0.4 per cent for first time in seven months, mainly influenced by price increases in vegetable oils/meals and cereals, which offset price declines in meat and beverages. In the domestic economy, the Bank of PNG noted a continued growth in economic activity with the continuation of construction of infrastructure projects, including sporting facilities in Port Moresby for the Pacific Games, and construction and maintenance of roads, health and education facilities. Comments are closed.
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