Medium Term Development Plan, 2011-2015 - UNDP in Papua New ...
Medium Term Development Plan, 2011-2015 - UNDP in Papua New ...
Medium Term Development Plan, 2011-2015 - UNDP in Papua New ...
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· the new era of political stability that has resulted <strong>in</strong> improved governance and <strong>in</strong>creased private sector<br />
confidence;<br />
· a return to macroeconomic stability underp<strong>in</strong>ned by exchange rate and <strong>in</strong>terest rate stability;<br />
· improvements <strong>in</strong> <strong>in</strong>frastructure, especially telecommunications; and<br />
· <strong>in</strong>creased Government development expenditure on public <strong>in</strong>vestments.<br />
The 2010 Budget forecasts anticipate this rate of average growth to cont<strong>in</strong>ue <strong>in</strong> the period 2010-2014 (figure<br />
2.1). These forecasts are based on an assumption of cont<strong>in</strong>ued political and macroeconomic stability and take<br />
<strong>in</strong>to consideration the considerable <strong>in</strong>vestments associated with establish<strong>in</strong>g PNG’s first LNG project. Also<br />
taken <strong>in</strong>to consideration is the anticipated w<strong>in</strong>d<strong>in</strong>g down <strong>in</strong> production at the Ok Tedi m<strong>in</strong>e by 2013.<br />
A surge <strong>in</strong> development expenditure for MTDP <strong>in</strong>itiatives to improve <strong>in</strong>frastructure and services po<strong>in</strong>ts to even<br />
higher growth than previously anticipated <strong>in</strong> the Budget 2010 forecasts. Figure 2.1 outl<strong>in</strong>es the MTDP<br />
forecasts for economic growth us<strong>in</strong>g the PNGGEM model of the PNG economy tak<strong>in</strong>g the additional MTDP<br />
<strong>in</strong>itiatives <strong>in</strong>to consideration. Implement<strong>in</strong>g the MTDP is expected to result <strong>in</strong> an average rate of growth of 8.7<br />
per cent between <strong>2011</strong> and <strong>2015</strong>. Growth is expected to average 7.6 percent through to 2014 before surg<strong>in</strong>g<br />
to nearly 14 per cent <strong>in</strong> <strong>2015</strong> as a result of production commenc<strong>in</strong>g <strong>in</strong> the LNG Project.<br />
2.1<br />
Growth <strong>in</strong> real GDP, 2010-<strong>2015</strong>, Budget 2010 and MTDP forecasts<br />
per cent growth<br />
Growth (per cent)<br />
14<br />
12<br />
10<br />
8<br />
6<br />
4<br />
2<br />
0<br />
2010 <strong>2011</strong> 2012 2013 2014 <strong>2015</strong><br />
Budget 2010 forecasts<br />
MTDP forecasts<br />
Source: The MTDP forecasts are calculated us<strong>in</strong>g the Government’s model of the PNG economy, PNGGEM<br />
After navigat<strong>in</strong>g through difficult times s<strong>in</strong>ce 2008, the global economy has begun to recover and is expected<br />
to return to normal growth levels dur<strong>in</strong>g the MTDP period. Importantly, PNG’s ma<strong>in</strong> trad<strong>in</strong>g partners fared<br />
well dur<strong>in</strong>g the global downturn, with Australia avoid<strong>in</strong>g recession and Ch<strong>in</strong>a cont<strong>in</strong>u<strong>in</strong>g on its path of very<br />
strong growth. Robust growth <strong>in</strong> Ch<strong>in</strong>a is particularly important for PNG as the revenues received for PNG’s<br />
m<strong>in</strong>eral exports will <strong>in</strong>creas<strong>in</strong>gly become dependent on the dom<strong>in</strong>ant Ch<strong>in</strong>a market.<br />
Growth <strong>in</strong> Ch<strong>in</strong>a is expected to underp<strong>in</strong> robust prices for PNG’s key m<strong>in</strong>eral commodities dur<strong>in</strong>g <strong>2011</strong>-<strong>2015</strong>.<br />
However, the current high level of gold prices is expected to recede until a small recovery after 2012 (table<br />
2.1). Oil prices are expected to rise steadily to approach US$100 a barrel by <strong>2015</strong>, and copper prices are<br />
expected to rema<strong>in</strong> at current high levels. Strong prices <strong>in</strong> gold, copper and oil po<strong>in</strong>t to a healthy revenue<br />
base for the Government over <strong>2011</strong>-<strong>2015</strong>.<br />
8