Bank estimates drop in GDP by 4pc due to Covid-19

THE Bank of Papua New Guinea (BPNG) has projected that the gross domestic product (GDP) for 2020 will decline by around four per cent, compared to the earlier growth forecast of 0.3 per cent in March.
BPNG governor Loi Bakani said in its monetary policy statement released last week that the revision reflected the negative growth in the country’s major trading partners, the Covid-19 containment measures imposed by the Government, which impacted businesses and Government operations and supply chains, and temporary scale-down/shutdown of major mining operations.
“The closure of Porgera mine since April, due to the expiry and non-renewal of the special mining lease for the operator, Barrick (Niugini) Ltd, also contributed to this negative growth,” he said.
“In the non-mineral sector, most sectors are expected to record lower growth.
“The transportation, construction, financial and insurance services, and accommodation (hotels) and food services sectors are the worst affected.
“To maintain their operations, most firms have reduced their costs by laying off workers, reducing working hours and delaying investment plans.”
Bakani said BPNG conducted a business pulse survey around the country to assess the impact of the Covid-19 containment measures on the micro, small and medium enterprises (MSMEs) sector in the first six months.
“Over two thirds of those surveyed have scaled down operations while the rest were temporarily closed and are expected to resume in the second half of the year,” he said.
“This was across all sectors of the economy, mainly in the construction, manufacturing, information and professional services.
“MSMEs experienced disruptions in their supply chains and cash flow, lower demand, reduced workforce and increased arrears to service providers and on loans.”