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By Bremebil Kuble

PORT MORESBY, Papua New Guinea (December 19, 2000 - The National/PINA Nius Online)---Business activity declined in the first half of this year, according to the Bank of Papua New Guinea.

Governor Wilson Kamit said in the bank's September quarter economic review that information obtained from the bank's bi-annual business survey and other data confirmed the decline in private sector activity.

He said the decline resulted from subdued activity in the agriculture sector, reflecting lower coffee and copra production, deterioration of the road infrastructure and depressed world market prices.

Mr. Kamit said this contributed to lower activity in the wholesale and transportation sectors.

In addition, Mr. Kamit said there was a decline in new investments by the mineral sector, back loading of development expenditure by the government and lack of new major construction projects by the private sector.

He said the depreciation of the kina in the first quarter of 2000 and the subsequent increase in inflation, as measured by the Consumer Price Index (CPI), led to the maintenance of high domestic costs, while subdued domestic demand contributed to lower sales volumes by the private sector, a decline in general imports and lower private sector credit growth.

To ease inflationary pressures, the central bank maintained a tight monetary policy stance. Mr. Kamit said the economic conditions in the first six months of 2000 forced many companies to rationalize their business activities, which resulted in a decline in average employment levels during this period, compared to the corresponding period in 1999.

He said the business survey results showed that, compared to the second half of 1999, the total value of sales by the private sector (excluding mining and petroleum and North Solomons province) declined by three percent in the first half of this year.

The lower value of sales by the companies surveyed was in all regions except the Lae region.

The decline was mainly attributed to lower sales in the wholesale and transportation sectors, which more than offset increases in the retail, manufacturing, construction and agriculture, forestry and fisheries sectors.

The latest data from the bank's Quarterly Employment Survey indicated that formal employment in the private sector, excluding mining and petroleum and North Solomons, declined by 0.2 percent in the first half of this year, compared to the second half of last year.

The decline reflected lower employment levels in all sectors except retail, wholesale, manufacturing and agriculture sectors.

Mr. Kamit said by region, declines in the National Capital District and the Highlands regions more than offset increases in the other regions.

He said employment in the June quarter of March increased by 2.1 percent, with increases in retail, manufacturing, and agriculture sectors and in all regions except the NCD and the Madang and Wewak regions.

For additional reports from The National, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/The National (Papua New Guinea).

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