The global economy remains constrained by inflated commodity prices, lingering pandemic effects, and supply bottlenecks.
According to BSP Pacific Economic and Market Insight Q1 2022 Report, BSP Group General Manager for Corporate Banking, Peter Beswick said Russia’s invasion of Ukraine is significantly affecting global commodities.
“One of the major impacts has been crude oil, with prices having increased from USD35 to USD120 BBL in the last 18 months (240%).
“A recent media report by Puma Energy CEO, Hulala Tokome, confirmed that fuel prices will increase by 80 tea per litre and will continue to rise. The impact will be felt across the economy with consumers, vehicles owners, construction companies, businesses, and electricity suppliers bearing the brunt of the higher fuel costs,” said Beswick.
In relation to COVID, Beswick stated that although COVID impacts have dissipated in 2022, persistent supply chain issues most especially from China are resulting in significant delays in product shipments and uplift in shipping costs increasing over 300 percent.
“This is a significant impact for PNG as 85 percent of consumables, raw materials for production, and finished goods are imported,” Beswick added.
In a statement, BSP said, for many businesses, the increased costs will need to be recouped from consumers via higher prices.