PNG economic survey: some weak signs of recovery

Abstract

The PNG economy has shown signs of recovery over the 2003 calendar year. This has been due to a fortuitous combination of good weather and good prices for its exports. Consequently, primary exports are on the rebound, the trade account is in a surplus, and construction, retail, and wholesale sectors are experiencing positive growth. This is a welcome change from the past as GDP contracted over the preceding three years. The current level of growth of output, however, is insufficient to bring about a rise in per-capita income, which has been falling for the past decade. Moreover, the rebound is fragile as macroeconomic stability in the form of price stability and internationally competitive interest rates are far from being achieved. The prevailing window of opportunity, therefore, must be used to improve the domestic environment for private sector investment. High on the list of policy priorities are: a return to fiscal sustainability; efforts to reduce the costs of doing business; and, efforts at completing long-instituted reforms.