PNG Economy

The study, commissioned by the Australian Government, World Bank Group member IFC and the region’s leading cruise operator Carnival Australia, looked at PNG’s five main ports and identified a number of opportunities and investments to develop cruise tourism and capitalise further on the growing sector.

The study said cruise tourism brought $5.9 million Australian dollars (K14.4 million) into Papua New Guinea’s economy last year, with an estimated $0.2 million dollars (K0.48 million) in indirect economic benefits, according to a new study.

NGIP Agmark chairman Donald Manoa stated in the company’s 2015 Annual Report that the decision to close its hardware business was because of competition.

“The year 2015 marked a challenging time for our business. We have been forced to face some hard truths about our organisation and about the Papua New Guinea economic situation.

Prime Minister Peter O’Neill stated this today during his address at the 32nd Australia - Papua New Guinea Business Forum and Trade Expo underway in Cairns.

O’Neill said PNG’s economy has grown at an average 9 percent each year between 2012 and 2015, and was among the highest in the world in 2014, growing at 13.3 percent.

He said PNG has demonstrated that the fundamentals of our economy are sound.

“We are demonstrating that we can manage the economy during tough times.

PNG is characterised by the proven pathways to development like the ExxonMobil company which operates the recently completed $US19 billion (K58 billion) PNG LNG project - a world class development and operation.

Economists describe the cost of labour in PNG as very low, significantly lower than Australia and some other regional neighbours.

An experienced workforce is also a vital part in the country with upstream oil and gas an established industry.

The low transport costs are involved in the LNG Project because PNG is close to key Asian markets.

On the other hand, the oil and gas sector, which provided a significant boost to the overall growth in 2014 and 2015, is expected to revert to the trend of natural decline after absorbing the impact of the first LNG production in 2014 and 2015 respectively.

Further supporting growth in 2016 is the anticipated improvement in the global economy.

This will assist commodity prices to improve and stimulate activities in the domestic economy.

Other factors also considered likely to boost activity in 2016 include the preparations for the 2018 APEC meetings.

Standard and Poor’s has downgraded PNG from being a stable economy to a negative due to the slide in energy prices.

Barker says this means PNG has major challenges to overcome in managing its economy.

He says the concern is over PNG’s failure to diversify the economy and encourage development in other industries which are more important than LNG in terms of job creation and broad based household income and opportunity.

He says cabinet ministers and government backbenchers should think about this given the current circumstance of the country’s economy

He says at a time when Papua New Guineans are expecting the country’s economy to flourish there is a shortage in cash flow.

Polye says despite the K4billion LNG proceeds in the Budget there is still news of critical services like health and education closing down.

“The drop in commodity prices is only by 30 percent and this should not create a shortage of money in any way,” he added