BSP Highlights Impacts of COVID -19 on the economy
Today Bank of South Pacific Limited launched its quarterly Pacific Economic and Market Insights publication for Quarter 1 2020. The report highlighted the forecast impacts on economic growth across the region in the immediate aftermath of the global Covid-19 pandemic.
With the major economies of China and the USA decelerating rapidly as movement and travel restrictions required businesses to scale back output, energy prices and other commodities reduced significantly as demand contracted. Equity markets and share prices reflected these negative sentiments. GDP forecasts for PNG for 2020 factor in much lower energy prices however, there is expected to be a rebound in 2021 as the economy emerges into a recovery phase. Countries such as Fiji, Cook Islands and Vanuatu will see growth contract more substantially recognising their dependence on tourism which has ground to a halt with international travel restrictions, but again a rebound is expected in 2021 as the travel industries in those countries re-emerges from hibernation.
Bank South Pacific appreciates the impact the changed economic conditions is having on its customer and is working proactively with its business customers to assist them during these COVID-19 related difficulties via support packages which were launched in the third week of March 2020. This involved BSP and its Relationship Managers providing a comprehensive COVID-19 business checklist to its customers with ongoing dialogue with affected customers. BSP Digital also actively promoted BSP's extensive range of digital banking solutions that enable customers to work remotely in the safety of their homes without having to travel to a branch.
BSP Group CEO Robin Fleming said, since announcing the COVID-19 relief packages for business in each of the countries BSP operates in, BSP had reduced the interest rate in PNG on all its existing variable rate interest products by 1% effective 1 April 2020 and all new fixed rate products by 1% for new loans funded after 1 April 2020. The only lending product that did not change was BSP's first home ownership scheme loan that was launched in 2015 and which attracts the lowest fixed loan rate in PNG of 4%. BSP is the only bank in PNG to reduce the interest rate on all of its lending products. "Business is affected indirectly when business and government revenues reduce as a result of lower activity associated with a particular sector, such as the tourism sector in Cook Islands, Fiji, Samoa, Tonga and Vanuatu or the oil and mining sector in PNG. This can result in Governments' spending less and businesses dependent on Government contracts seeing revenue reduce," Mr Fleming said.
Group General Manager - Corporate Banking, Mr Peter Beswick said, "With BSP's experienced relationship managers in PNG and our branches across the Pacific we are ready to assist and support business activity. And our national branch networks remain open for business."
He said, once the effects of COVID-19 pass, "business sentiments are anticipated to be cautious, as commodity prices recover, global trade reactivates and international travel resumes."
"PNG's existing resources operations Ok Tedi, Harmony Hidden Valley, Newcrest Lihir, and Exxon PNG LNG will continue to create opportunities while in the medium term there are positive economic growth prospects underpinned by the resources sector projects, including Papua LNG, P'nyang, and Wafi-Golpu," Mr Beswick said.