I READ with interest an article titled “PNG still growing” in The National on Monday (Sep 5).
The treasurer stated that “…2016 represents the 15th successive year of economic growth” but failed to provide compelling economic evidence to substantiate this statement.
In fact economic growth had slowed down in 2016 to around 2.2 per cent compared to earlier growth rates of 13.3 per cent in 2014 and 9.9 per cent in 2015.
This showed a stiff declining trend in per capita aggregate output in the space of three consecutive
years which is perhaps a sign of severe economic downturn.
Though there has been increased capital investment and trade activities spurred by the PNG LNG project which had contributed to the recent growth records, there was minimal technological diffusion which provided the downside to economic growth.
The proposed cyber optic cables to be installed along the PNG LNG project corridors have never eventuated and technical skills transfer to locals has been minimal amongst other downside factors.
Structural transformation stemming from the PNG LNG project also remains stagnant as reflected by the government’s inability to open up road networks in and around the PNG LNG project corridors to bolster industrial growth in areas such as farming, tourism and logging activities capitalizing on the PNG LNG project and the proposed cyber optic cables installation.
This is because the PNG LNG project and the proposed cyber optic cable installation have the capacity to take agriculture and industrial activities to the next dimension as shown by the recent efficiencies in Chinese agricultural and industrial systems and practices.
Given the volatile global economic climate and the varying economic growth rates of different global economies, PNG should shift trade activities to industries that have comparative advantages to offset inefficiencies in other industries.
PNG seems to have advantages in the tuna trade and in the tourism industry thus it should upscale efficiency measures and increase the value of these markets to bolster economic growth.
Further, urbanization remains stagnant due to rundown public houses and a minimal to a lack of government intervention in this sector.
This means, valueadding, increased trade, urbanization and structural transformation remains the downsides to economic growth that the government should address.
Other aspects of economic prosperity also remain stagnant.
The return on capital per employee was negated by a downturn in global commodity prices and a severe dry spell which resulted in the downsizing of operations at Kutubu, Moran and Gobe oil fields and closure of operations at Ok Tedi and Tolukuma mines.
Although waiting for commodity prices such as gold, copper and crude oil to recover is acceptable, it would be a temporary situation that will bolster a lopsided economic growth and not necessarily a sustainable growth.
I assume 2016 as a year of severe economic downturn as depicted by the country’s trade cycle and
the above mentioned technicalities.This is opposed to the government’s claim that it is the 15th successive year of economic growth, which is a joke.
I think as a responsible government, the O’Neill Government should provide concrete economic facts about the economy and not political gimmicks to deceive the people.
Mike H, Via email