PNG Economy

According to the 2015 and 2016 Gross Domestic Product reports, PNG has a real GDP of 5.3 percent, simply indicating positive activities in the country’s economy.

Gross domestic product is the summary of the total production that took place in an economy in a given period.

Tony Waisa, head of Economics Statistics Division of NSO, revealed that PNG’s economy has performed well with a 5.3 percent growth rate.

“It represents that the country has grown,” explained Waisa.

“That 5.3 percent is good. It’s showing that the country is developing.”

Economist by profession and board member of the Hargy Oil Palms Limited, Sir Brown Bai, says creating a lucrative economic environment, conducive for investments, is vital. 

Sir Brown admitted that PNG needs and requires investment.

The agricultural sector must look towards developing world class operations in the country.

Sir Brown used Hargy Oil Palms and sister company, New Britain Palm Oil, to reaffirm his statement.

This is due to the marginal increase in imported inflation from PNG’s major trading partners and increased demand from APEC-related activities, as reported in the Bank of PNG’s Monetary Policy Statement for March.

The slight increase comes despite a downward trend in inflation from 6.6 percent in 2016 to 4.7 percent in 2017, reflecting low economic growth, relative stability in the Kina exchange rate and lower prices of seasonal food items.

Shadow Minister for Treasury & Finance, Ian Ling-Stuckey, says this is only the fourth time in the last two decades that PNG has been put on this negative watch, meaning there is an increased chance of a credit ratings downgrade.

“PNG’s credit rating at B2 was already five grades down from investor ‘prime’ status,” stated the shadow minister in a statement.

The International Monetary Fund Report Article IV stated that in the absence of any major new resource project to spur investment and depressed Foreign Exchange shortages, the outlook for growth remains under 3 percent while inflation continues to ease.

The IMF Report stated that large financial account outflows related to project debt repayments have contributed to a shortage of foreign exchange.

In these circumstances, IMF recommended that decisive steps be taken to strengthen the country’s fiscal and balance of payments positions.

O’Neill in a statement said a strong and stable government, supported by an overwhelming majority in the National Parliament, is the foundation that will guide us through the challenges and opportunities of the coming five years.

PM O’Neill said the country have been through very tough times, and there are challenges that remain but the Government will manage it amicably.

He added that the reduced world commodity prices, and the impact of drought, are among several factors that have placed pressure on our economy.

In its Quarterly Economic Bulletin for June, the Bank of PNG states that this is due to unemployment, falling commodity prices and reduced imports.

The report states that while global economic growth maintained its momentum in the second quarter, international prices of most of PNG's export commodities declined, compared to the previous quarter. Also while production of most commodities increased, this was not sufficient to offset the decline in prices and resulted in low export receipts.

In its Quarterly Economic Bulletin for June 2017, the Central Bank says over the four consecutive quarters to June 2017, annual headline inflation trended downward.

Despite total inflation increasing for the June Quarter at 1.2 percent, compared to a 1.1 percent increases in the March Quarter, the Bank states that annual headline inflation continues on a downward trend.

The Bank further said this trend continued to September 2017 with annual inflation at 5.1 percent.

In a statement, Foreign Affairs and Immigration Minister, Rimbink Pato, says: “We are emerging from a challenging period with reduced commodity prices, but we are seeing a rebound that is strengthening the economy.

“Our economy is into the fifteenth year of positive economic growth, and debt and inflation are under control.

“Despite the recent global downturn, the Government was able to manage pressures and not reduce critical service delivery.

“We do have foreign currency access concerns that are being resolved, and have improved since last year.”

This was from the executive board of the International Monetary Fund (IMF), in consultation with PNG on November 29, 2016.

“As a commodity exporter, the PNG economy has been hit hard by the drop in world commodity prices and a major drought. The authorities have responded to these shocks through fiscal tightening and a combination of modest exchange rate depreciation and FX sales,” the board said in a statement.

“Strong economic growth driven by the start of the PNG LNG project, has tailed off amidst weak non-resource sector growth.