“BSP is expecting a much improved 2021 backed by significant key projects expected to proceed in the near future, despite 2020 being a difficult year for individuals and businesses,” said BSP Group Chief Executive Officer, Robin Fleming, when releasing the BSP Economic & Market Insight December 2020 quarter publication this week.
Mr Fleming highlighted that dealing with the implications of the Covid-19 global pandemic was both a major challenge and significant achievement for the bank in responding positively to a difficult year. “Global economic output is expected to expand by 4% in 2021 but remain more than 5% below pre-pandemic projections whilst PNG economic growth is projected to recover to 2.5%.”
He outlined the following supporting views as presented in the quarterly publication:
- Global economic growth is expected to expand by 4.0% in 2021, after shrinking by-4.3% in 2020. Global growth is envisioned to moderate down in 2022 to 3.8%, weighed down by lasting damage from COVID-19.
- Advanced economies are projected to recover, with growth reaching 3.3% and 3.5% in 2021 and 2022 respectively, on the back of pandemic containment, aided by widespread vaccination and sustained monetary policy accommodation, which is expected to more than offset the partial unwinding of fiscal support.
- Pacific region is expected to recover by 1.3% in 2021, contingent on how quickly travel and trade restrictions are resolved, according to the ADB’s December Report. The economies of Fiji, Solomon Islands and Vanuatu are expected to recover in 2021, but remain below 2019 levels. Samoa, Tonga and Cook Islands are expected to continue to struggle, with travel bans and different forms of containment measures remaining in place.
- PNG’s Economic growth in 2021 is seen to recover to 2.5% vs a 0.4% increase in 2020.
Mr Fleming added that PNG’s growth is expected on the back of the major projects proceeding in the near future.
“Major projects such as the Wafi-Golpu valued at K18.4b have received environmental approval and the Papua LNG fiscal stability agreement has been signed by all parties. This also includes the planned resumption of Porgera Mine in the near future which will provide immediate Foreign Exchange relief.
The global rollout of Covid-19 vaccinations in 2021 will permit some normalcy to international travel. This will in turn provide much needed support for the hotel and airline industries,” Mr Fleming concluded.