PNG’s economy on right track: Economist

Despite the constant criticisms on the economic cash flow of the country, the Economist Intelligence Unit (The EIU), has indicated otherwise.

The EIU, which is the research and analysis division of The Economist Group, indicates that conditions in 2017 are likely to be more favorable for PNG than in 2016 when the economy was hard hit by weak global commodity prices, which weighed on fiscal and export revenue.

In 2018, The EIU expects a slowdown in the rate of expansion, as these positive factors wane and weaken global growth, resulting from a sharp slowdown in China, weigh on export revenue and investor confidence.

However, PNG’s economic ties with Australia will remain strong and relations with China are likely to deepen across 2017-21.

Characterized both by high potential and risk, PNG’s economic climate is impacted by a significant exposure to the mining industry.

The EIU continues to expect increasing infrastructural investment in the development of new capacity owing factors such as the predicted growth in demand for LNG from Asia.

Meanwhile, former Prime Minister and Economist Sir Mekere Morauta in a statement said Prime Minister Peter O’Neill’s claim that he will increase national debt will burden all Papua New Guineans.

“A primary cause of the woes Papua New Guinea is currently experiencing is Mr O’Neill’s gross mismanagement of the economy and public finances, including imprudent borrowing,” Sir Mekere said.

Sir Mekere pointed out that under the Fiscal Responsibility Act, the K22 billion public debt already incurred by Mr O’Neill has surpassed the legal limit by more than 5 percent above the permitted 30 percent of GDP.

However according to Dr. Simon Baptist, Global Chief Economist of The Economist Intelligence Unit, “The resulting investment spending will support a lift in economic growth from 2019, but the economic benefits will largely occur post 2021.”

Dr. Baptist, will be a keynote speaker on Day 1 of the PNG International Business Summit to be held on August 22-23 at the Brisbane Convention & Exhibition Centre.

Freddy Mou