KFMIC Report: Thursday, 16 February 2015

PNG Macro Environment

In light of recent decline in commodity prices, it is too early to determine the exact impact on the Govt’s budget and growth of the economy. However it is likely that the impact will be more muted than previously expected; LNG prices have not dropped as much as crude and the Govt has the option of compensating for the prospective shortfall by increasing LNG output volumes. It is still widely believed that this year’s GDP will supersede last year’s figure. Inflation is likely to increase from the current 5.3% (last 12 months’) to over c.6.0% over the next six months.

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