That's the view of Bank South Pacific in its Pacific economic and market insights for the December quarter, 2019.
Advanced economies growth is projected to soften to 1.4% in 2020 (1.6% in 2019), while growth in emerging market and developing economies is projected to recover to 4.1% in 2020, from 3.5% in 2019.
"Pleasingly, the US and China have reached an ‘agreement on a Phase One trade deal' that requires structural reforms and other changes to China's economic and trade regime," BSP said.
The oil market is set to return to surplus over the 1H-2020, and so expectations are that prices will weaken over this period.
Natural gas prices largely remained unchanged during 2019. Natural gas consumption continues to increase, supporting stable prices into 2020.
Annual average gold prices continued to improve in 2019, in contrast to other commodities, the demand for gold increases with rising uncertainties.
Cocoa prices have strengthened year-on-year, reaching $2.34/kg in 2019.
BSP predicts Papua New Guinea's economy to slow in 2020:
• The 2020 budget projects an expansionary fiscal policy, forecasting a big deficit designed to stimulate growth in the non-resources sector of the economy.
• The 2020 budget increased the expenditure envelope to K18.7 billion.
• The budget will provide short-term stimulus through capital investment and injecting additional foreign exchange through increased Bank of PNG market intervention.
• PNG's economic growth forecast is projected to have recovered from an average growth rate of 4.9% in 2019 and then ease down to 2.8% in 2020.
• The fourth quarter kina exchange rate depreciated against both the US dollar by 5bps and the Australian dollar by 154bps between September 2019 and December 2019.
On east Asia and the Pacific, growth in the region is projected to ease to 5.7% in 2020 amid continued domestic and external headwinds, including the impact of trade tensions.
• Regional growth excluding China is projected to recover slightly to 4.9%, as domestic demand benefits from generally supportive financial conditions amid low inflation and
robust capital inflows.
• Fiji's economy is estimated to grow by an average rate of 2.8% in 2020 reflecting the moderation of growth in consumption and investment.
• Vanuatu's GDP growth is expected to decrease to an average rate of 2.9% in 2020 and then ease to around 3.0% over the medium term.
• Solomon Islands average economic growth for 2020 is projected to be about 2.8%, a slight increase from 2.7% in 2019. Solomon Island's benign growth is due to the reduced contribution of the primary sector, from logging revenue.
• Tonga's average economic growth is expected to pick up to around 3.7% in FY2020.
• In Samoa, economic growth is projected to pick up further in FY2020, driven by the July 2019 Pacific Games and the hosting of regional conferences, which drove further increases in the tourism sector.
• After experiencing better-than-expected average economic growth of 5.3% in 2018, the Cook Island's economy is projected to have moderated to 3.2% in 2019 and ease slightly down to 3.1% in 2020.