While reduced global commodity prices are having a major impact on Papua New Guinea government revenues this year, there are ‘incipient signs of a turnaround’, according to data published in the latest ANZ Pacific Quarterly, released this week.

The report cites PNG Treasury and ANZ figures that suggest government revenues were 40% lower than budgeted in the first half of 2013 due to lower export income.

However, indicators are sufficiently positive for ANZ to be upgrading its 2013 year-on-year GDP growth forecast for PNG from 4% up to 5.2%. (The forecast is still below the PNG Treasury forecast of 6.1% growth for this year.)

ANZ attributes the improved picture to ‘the continued build out of the LNG project, a strong fiscal boost, and acceleration in non-mining activity.’ This is despite an ‘underperforming’ agricultural sector.

Notably, gold, copper and oil prices have risen in recent months, while palm oil, coffee and sugar prices remain sluggish.

Meanwhile, government expenditure has been slower than anticipated this year, with just 29% of its budgeted development expenditure of 2.5 billion kina spent as of 30 June.

The ANZ report, which launches new ANZ Pacific Commodity Price Indices for the seven Pacific economies in which ANZ operates, also includes predictions that PNG’s currency, the kina, will fall in value against the US and Australian dollars over the next 12 months before rallying towards the end of 2014.

Elsewhere in the Pacific, ANZ has also improved its forecast for the Pacific’s second-largest economy, Fiji, up to 2.7%, ‘buoyed by strong gains in investment activity, credit growth and disposable income’, while the growth forecast for Samoa has dropped from 2% to 0.9%.