KFMIC Report: Friday, 18 December 2015

PNG Macro Environment

Noting the release on the 2016 budget, KFM maintains that GDP growth for this year should be around levels of 9.0%. According to the Budget, expenditure cuts to the 2015 Budget of c.K1.4bn were made in response to drop in commodity revenues. PNG’s agriculture, utilities and mining sectors remain the key sectors affected by dry weather conditions brought on by the El Nino. The third quarter CPI update for rolling 12 month inflation was 5.8% while BPNG announced to maintain the Kina Facility Rate at 6.25%. KFM maintains its view that inflation will be around 6.0% mainly driven by the continued downward momentum of Kina against the USD.

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