The Black Wednesday Riots in Port Moresby earlier this year have significantly affected business and investor confidence.
This is according to the BSP’s Pacific Quarterly Economic & Market Pulse for the June quarter 2024.
According to the reports economic and market views, in response to these disruptions, the Government approved K260 million (US$60 million) to support impacted businesses.
“Business activity showed sluggishness towards the end of Q 2 2024 with mixed employment trends observed across different regions, predominantly negative Employment declines were noted in the Southern Region, Morobe Islands Region, and NCD compared to Q 1 2024 while the Mamose and Highlands Regions experienced increases,” the report stated.
“The Porgera mine is expected to face delays in achieving full production by Q 3 2024 due to operational setbacks from the Mulitaka landslide, potentially pushing anticipated production into Q4 2024.
“FX constraints continue to impact import dependent businesses, which are facing challenges despite an increased demand for FX, as evidenced by the rising FX orders placed with BSP.”
In terms of global economic Outlook, the bank stated that global growth in 2024 is expected to be subdued, as tighter global monetary policies restrict access to credit and constrain economic activity.
However, the bank stated that global growth is anticipated to incrementally improve in 2024 before gaining momentum in 2025.
Despite stringent monetary conditions affecting households and credit markets, global economic activity remains resilient. Real incomes are benefiting from moderated inflation, alongside a resurgence in trade growth turning positive.
The Asian Development Bank (ADB) forecasts a moderation in growth for Developing Asia to 4.9 percent in both 2024 and 2025.
This outlook is underpinned by robust domestic demand and improved exports of semiconductors and services, including tourism, across most sub-regions, despite a deceleration in economic activity in the People’s Republic of China.
Inflation in Developing Asia is projected to decelerate, easing from 3.3 per cent in 2023 to 3.2 per cent in 2024, and further moderating to 3.0 percent in 2025.
Moreover, countries in the Association of Southeast Asian Nations (ASEAN) are actively promoting the use of local currencies for trade and reducing dependence on the U.S dollar in cross-border transactions.
Among ASEAN nations, Indonesia stands out for its assertive efforts towards de-dollarisation, driven partly by concerns over increasing U. S debt levels.