KFMIC Report: Friday, 18 September 2015

PNG Macro Environment

KFM still believes that real GDP growth should increase from 8.4% in 2014 to levels around 9.0% in 2015 compared to Budget projection of 11.0% which was revised down from 15.5% according to the MYEFO report. The current dry weath-er conditions brought on by the El Nino continue to affect key sectors in PNG especially agriculture, utilities and mining sector with low water levels and crop yields. NSO* recently released the June quarter CPI update with a 12 month CPI change of 5.7%. In light of this recent update, KFM has revised its view on infla-tion to be around 6.0% mainly driven by continued downward momentum of the Kina against the USD.

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