Rising Gold Prices Could Benefit PNG’s Economy, Says Kina Bank
Kina Bank has highlighted that the ongoing record-high gold prices are expected to positively impact Papua New Guinea's gold export earnings. This was revealed in the bank’s September 2024 Economic Update, where Managing Director and CEO Greg Pawson noted that gold prices had surged to an all-time high of US$2,600 per ounce in September, and the upward trend is likely to continue amid global economic uncertainties.
Pawson attributed the rising prices to factors such as the upcoming U.S. elections and the ongoing conflicts in the Middle East, which have led investors to turn to gold as a safe-haven asset. He also pointed out that anticipated interest rate cuts by the U.S. Federal Reserve are likely to weaken the U.S. dollar further, which could push gold prices even higher due to the inverse relationship between the two. "This could have favorable consequences for PNG’s gold export revenues," Pawson explained.
The report also highlighted improvements in Papua New Guinea's foreign exchange (FX) market. According to Kina Bank, the PGK/USD interbank rate has continued to decline, and the backlog of import orders for essential goods has fallen by 25% over the past year. This progress has been credited to the consistent intervention of the Bank of PNG, and despite the inclusion of non-essential goods in the import order book, currency waiting times have shortened to approximately 4-6 weeks.
The companies listed on the PNG Stock Exchange that export key commodities have reported strong half-year profits, largely driven by high cocoa prices and stable global equity markets. "The elevated cocoa prices and the resilience of international equity markets were significant contributors to the success of local exporters," the bank stated. Looking ahead, Kina Bank expects these companies to maintain their strong performance in the second half of the year.
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