Posted By Staff Reporter
The ANZ’s South Asia, ASEAN and Pacific chief economist Glenn Maguire says the depreciation of kina during this period of drop in global commodity prices is good.
He said there were appropriate policies seen in the country.
“The first one and is occurring is that the currency is moving in the right direction – the Kina should be weakening,” Maguire said.
“This is the basic economic response to a shock such as a loss of an export market or a collapse in the external prices.
“The kina has been a little bit stable but the kina is moving in the right direction and over the next 12 to 18 months, we will probably expect the Kina to perhaps depreciate by another 5-10 per cent.
“That would be in line with our (ANZ) assumptions on commodity prices over that period.
“The best point to make is, this important adjustment of the currency weakening to accommodate the external shock.”
He said the bank thinks that the growth rate would stabilise and is expected to grow to be around 10 per cent this yea. “It’s going to drop in 2016 to around 3 and 3.5 per cent,” he said.
“But then we are going to see the recovery fall into place in 2017 and 2018 onwards.
“It is a difficult period for PNG but it is not a unique experience.
“The way the global environment is shaping up at the moment is in a way affecting commodity exporters the most.
“We are in a period where a number of transitions are occurring in the global economy.”
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