GDP means ‘grossly distorted picture’

 OUR Government’s fetishism with Gross Domestic Product (GDP) growth has it hoodwinked to the realities of its impact, or the lack of it, on the lives of ordinary Papua New Guineans.

There is growing chorus from economists around the world to move away from GDP growth, once considered the gold standard for measuring economic success in favour of more robust indicators such as GDP Per Capita, Human Development Index and in some cases incorporating all of these together into “National Wellbeing Index” such as is employed by Canada.

Papua New Guinea is a classic example of why GDP growth as a measure of economic prosperity needs to be abandoned because it does not measure success of individuals, families and communities in the country.

According to the world-bank in 2014 PNG’s GDP was US$16.93b and our population was 7.464 million. (http://data.worldbank.org/country/papua-new-guinea). 

 It follows that our “GDP Per Capita” was therefore $2,268.

GDP is the combined wealth of a nation over a given period. “GDP Per Capita” is GDP divided by the total population (basically GDP per person) and is a better guide to average living standards in a nation.

By those numbers the GDP per person for PNG in 2014 was $6 (~K18) per day. 

Compare that with the GDP per capita for Fiji for the same period of K42 per person per day and you can begin to appreciate how distorted and fudged our GDP growth is with respect to our living standards and wealth distribution in the country. 

People in Fiji (with nowhere near our world record economic growth) are generally better off, at least from an individual wealth position.

Because it is averaged out, GDP masks the gap between the rich and poor.  

For example, rising costs of goods and services (rice, tin fish, fuel etc) is very good for the GDP (after all it is the measure of the wealth the nation generates remember) but those very same rising costs deemed great for our GDP is tough on individuals and our struggling families. 

So great GDP figures in no way represents the economic health of individuals in the nation, to say it does, it is at best a misrepresentation and at worst intellectual dishonesty (especially when peddled by learned people such as department secretaries).

When you look at other figures such the UN Human Development Index (http://hdr.undp.org/en/countries/profiles/PNG) note that PNG sits at 157 out of 187 countries ranked. 

The HDI incorporates dimensions of well-being such as income, access to health, education communication and among other things. 

Our lowly rank corresponds with our GDP per capita and rebuffs the distorted reality being broadcasted by the Government. 

This report (http://www.stiglitz-senfitoussi.fr/documents/rapport_anglais.pdf) by International Commission on the Measurement of Economic Performance and Social Progress  whose chairman is Nobel Prize winning economist Professor Josepth Stiglitz emphasised that GDP is not a good measure of how well an economy is performing.

Daniel Hasimani

Porgera, Enga