O’Neill says economy not in recession

Prime Minister Peter O’Neill says the country’s economy is not heading into recession.

“Absolutely not, inflation goes up and down but it has averaged 6 per cent over the last 15 years and it won’t change in one (year),” Prime Minister O’Neill told Loop PNG.

He also appealed to Papua New Guineans to have confidence in the country’s Government and management of the economy.

Bank of Papua New Guinea Monetary Policy Statement for the month of September 2016 forecasted the annual inflation rate to reach 7.5 per cent in 2017 because of excessive government spending to fund the 2017 National Elections and 2018 APEC meeting.

The BPNG Governor Loi Bakani stated in the Central Bank’s third quarter report that “annual headline inflation was 6.8 per cent in the June quarter of 2016, up from 6.5 per cent recorded in the March quarter of 2016, and 6.4 per cent in the December quarter of 2015.

Also the Kina continues to depreciate against major world currency because of lower revenue income into the national purse.

The Kina dropped by 9.5 per cent in a space of 12 months the Central Bank’s Report stated. 

According to today’s Bank South Pacific Exchange Rate, K100 will give you US$ 26.50 and AUS$ 34.49.

Meanwhile, an academic says the country’s economy is showing signs of recession.

Francis Hualupmomi, a political scientist and a PhD student in Public Policy in the School of Government at the Victoria University of Wellington, New Zealand said our currency is depreciating sharply against foreign currencies.

 “It appears clearly that the currency is not necessarily affected by the US dollar but by domestic macroeconomic management.

“This should be admitted rather than shifting blame on the global market forces. The argument that the economy is affected by depreciating US Dollar may not necessarily hold true. US Dollar remains stable while PNG Kina is depreciating.”

Hualupmomi added that the establishment of the country’s Sovereign Wealth Fund must be fast tracked so support to economy during low commodity prices on the world market.

Caption: File picture of Prime Minister Peter O’Neill.  

Charles Yapumi