PNG Macro Environment
KFM maintains the view that medium term economic growth will be slow, as government infrastructure spending fails to compensate for falling private sector demand and investment. Sluggish local demand, completion of the construction phase of the PNG LNG project and inefficiencies in implementing government spending programs will all contribute to reduce economic activity. We believe inflation will increase over 2014 towards 5% – 6%, in particular following the 2013 depreciation of the PNG Kina. We believe the PNG Kina will depreciate in H1 2014, but only marginally against USD.
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