AFTER years of unassailable sustainable growth, the Papua New Guinea economy is in trouble.
The once hailed as the Pacific’s tiger economy is struggling to stay afloat because of a spiraling debt burden, uncontrolled government spending, a record
four consecutive budget deficits, lack of foreign direct investment into new projects and the collapse in the kina.
The downward revision of the country’s Gross Domestic Product (GDP) growth forecast from the April 2015 forecast is mainly due to lower international commodity
prices, according to the World Bank’s East Asia and Pacific report released in October 2015.
The price fall has weighed on the overall economy and especially on government revenues, more than it had anticipated.
It is anticipated growth for this year would be half an earlier estimate of 20 per cent. This was confirmed by world’s leading rating agency Standard & Poors in a
report also released in Oct 2015.
Standard & Poors has downgraded its outlook on the Papua New Guinea economy from stable to negative, due to the slide in global energy prices. original site At the same time, the ratings agency affirms the country’s ratings at B+/B.
The country has swiftly, since it started exporting liquefied natural gas last year, become highly reliant on the industry.
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