PNG Economy

Cairns has always had particularly close contact and relationship with our neighbour to the north in PNG. The business relationships have been actively promoted by Cairns Chamber. Cairns has also been a favoured haven for less reputable funds from notoriously corrupt PNG governance.

There has been further political instability recently in PNG with a confidence vote in parliament imminent and concerns over the economy. A recently launched blog may be of interest and worth a follow offering “timely, accurate, frank and fearless advice”: PNG Economics.

Conclusion from the most recent post on “PNG’s Recent Recession”:

This new data is of great concern. While turning on the PNG LNG taps has made the headline GDP numbers look good (24% growth over two years), this has been a smokescreen for how poorly the key parts of PNG’s economy have been doing over 2014 and 2015. The combination of economic statistics indicates PNG has just had a significant recession for the parts of the economy that most affect PNG’s citizens.

Looking forward, the economy still suffers from foreign exchange shortages driven by poor policy choices, faces downward pressure on aggregate demand due to the major reduction in government expenditure (related to excessive earlier promises and poor revenue effort) and continuing uncertainty on commodity prices. Announced policies in areas such as agriculture, lands and SME have hurt confidence and will discourage growth. Earlier warnings about a slippery slope were ignored and there is now much more repair work to be done. The causes for the recession include the El Nino drought and falls in commodity prices, but the causes also go well beyond these specific issues and to the heart of poor economic management in PNG over recent years. However, with the right leadership and policies, PNG should be able to realise the opportunities owed to its people by embracing the Asian century.

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