PNG’s import levels drop to historic low

THE country’s import levels are at their lowest in the past 30 years, according to the Australian National University Development Policy Centre research officer Rohan Fox.
Fox said that this had adversely impacted certain industries, while noting the flow-on effects from this historical drop.
“One result of the decline in imports is that there may be less choice of items for consumers to choose from,” he said.
“Imports are also often used as inputs in to local production and construction. So the drop in imports has had severe impacts on these industries.
“Although we would expect a high exchange rate to limit inflation, the foreign exchange restrictions which have been used to stop the exchange rate from falling, may have also had a positive effect on inflation.
“By limiting access to foreign exchange and imports, this may have meant that those that do have access, have less competition, and have actually put their prices up.”
Fox said it was unlikely to drop further, with the chance of a slight increase in imports by next year.
“From conversations with local businesses, it seems that we may have seen the bottom of the drop in imports,” he said.
He said imports would either level out or increase slightly in 2018.
“However, as a percentage of GDP, imports have never been this low in the past 30 years,” he said
Fox also noted that many of the economic challenges in PNG were due to global drops in resource prices that were beyond its control.
“However, the debt taken on in the boom times, along with foreign exchange restrictions, have been the result of decisions made by those in the country,” he said.