Economy Growing – O’Neill
A World Bank report of stronger economic prospects for developing economies after years of disappointing growth has been applauded by Prime Minister Peter O’Neill.
Mr O’Neill said the forecasts of the World Bank were very much in line with the predictions of the 2016 National Budget.
He said very broadly, the State has been investing in the economic enablers such as health, education, law and order and key infrastructure.
The Bank’s January 2017 Global Economic Prospects report said global economic growth is forecast to accelerate moderately to 2.7 per cent in 2017 and expected to edge up to 1.8 per cent for advanced economies.
It said this was after a post-crisis low last year as obstacles to activity recede among emerging market and developing economy commodity exporters, while domestic demand remains solid among emerging and developing commodity importers.
“After years of disappointing global growth, we are encouraged to see stronger economic prospects on the horizon,” World Bank Group President Jim Yong Kim said.
“Now is the time to take advantage of this momentum and increase investments in infrastructure and people. This is vital to accelerating the sustainable and inclusive economic growth required to end extreme poverty.”
The bank said slowing investment growth was partly a correction from high pre-crisis levels, but also reflects obstacles to growth that emerging and developing economies have faced, including low oil prices (for oil exporters), slowing foreign direct investment (for commodity importers), and more broadly, private debt burdens and political risk.
“We can help governments offer the private sector more opportunities to invest with confidence that the new capital it produces can plug into the infrastructure of global connectivity,” said World Bank chief economist Paul Romer.
According to the PNG 2017 budget growth was reduced but never theless to settle at a comfortable 2,2 per cent.
Mr O’Neill said the boom of the last 14 years was largely brought about by favourable commodity prices and the construction, establishment and commissioning of the PNG LNG Project.
“We have always recognised that institutional development and maturity of the economic framework would always mean that we would not have been able to maximise the potential benefits from such a large undertaking.
“With the project now in production phase, it has always been anticipated that growth would abate somewhat while economy readjusts to size of the new economy.
“It would seem that commentators are confusing the size of the economy with the rate at which our economy is growing. Whilst the rate of growth has slowed somewhat as was expected, it is still a much larger economy than it was previously.”