Bank: Outbreak will affect PNG


PAPUA New Guinea will be impacted through trade, investment and remittance channels as a result of the coronavirus outbreak, the World Bank says.
The National sent queries to the World Bank PNG to get its views on the potential impact on the country’s economy.
In response, the bank referred the paper to its latest Economic Update which said a potential economic impact of the coronavirus was still unknown and difficult to predict. “The severity and duration of the outbreak remains uncertain, making it impossible to provide precise estimates of the economic impact of the coronavirus,” the bank said.
“Nevertheless, it is clear that the impact will be substantial, with slower growth of the Chinese and global economies than earlier anticipated.
“The lower economic activity in China, following weaker demand and supply side disruptions, has already affected negatively consumer and business confidence and financial markets globally.
“The EAP (East Asia and Pacific) region, including Papua New Guinea, will be impacted through trade, investment, and remittances channels.”
The bank said coronavirus had already affected tourism in the region and started pushing commodity prices down.
It said foreign direct investment and remittances from China are also expected to be affected by the outbreak.
For Papua New Guinea, the commodity trade channel is paramount, it said.
“An anticipated drop in commodity prices and export volumes will lead to lower export revenue, putting pressure on GDP (gross domestic product) growth, FX (foreign exchange) situation and fiscal accounts due to lower resource revenue and higher spending for disease-mitigation measures, leading to a higher fiscal deficit and an additional debt distress,” the bank said.
However, the bank also highlighted that Papua New Guinea had reacted to a potential spread of the coronavirus by setting up a special ministerial committee for coordinating government response to the coronavirus, which is done in partnership with the donor community, including the World Health Organisation office in the country.