QUARTERLY ECONOMIC BULLETIN – DECEMBER QUARTER 2011
Mr. Loi M. Bakani, Governor of the Bank of Papua New Guinea (Bank of PNG), today released the December 2011 Quarterly Economic Bulletin (QEB). This statement provides an overview of the economic and financial developments for the December 2011 quarter and the developments since December 2011.
1. UPDATE ON DEVELOPMENTS SINCE DECEMBER 2011
Global economic recovery remained relatively sluggish in 2011, reflecting weak investment activity and consumer demand, and high unemployment rate in advanced economies. The International Monetary Fund (IMF) estimated the global economy to have grown by 3.8 percent in 2011, with real GDP growth of 1.6 percent in the advanced economies and 6.2 percent in emerging and developing economies.
As global economic activity is envisaged to slow down further in 2012, the IMF revised downward its forecast for 2012 to 3.3 percent from 4.0 percent made earlier in its September 2011 World Economic Outlook (WEO) publication, reflecting weak growth in the euro area. The IMF forecast is for GDP to grow by 1.2 percent in advanced economies, and emerging and developing economies to grow by 5.4 percent in 2012. The down side risks to these forecasts include further deterioration in the debt crisis in the euro area and its impact on other countries, lack of progress of fiscal consolidation in US and Japan, and unstable real estate and credit markets due to lack of confidence and lower expectation in emerging economies. These, combined with oil supply shocks due to geopolitical tensions in the Middle East and North Africa, could lead to a fall in demand and global output.
Governor Bakani noted that global demand for primary commodities is expected to decline in 2012 and in the medium term, in response to a weak global demand and improvement in supply conditions. However, oil price is expected to remain elevated as a result of supply constraints associated with the geopolitical tensions in the Middle East and North Africa. This is likely to affect Papua New Guinea’s Budget revenue forecast in 2012 and the medium term. As of 23rd March 2012, the prices of gold fell to US$1,654.10 per ounce after a high of US$1,718.28 at the beginning of the month, while the price of oil continue to remain volatile and traded at US$105 per barrel.
(The above is an excerpt from the report – for full report see below)
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