PNG IS IN A ECONOMIC RECESSION - LEADING ECONOMIST

PNGBLOGS

Papua New Guinea is in economic recession, according to leading Australian academic economist Paul Flanagan, who is an expert on PNG.

This is revealed in his analysis (at his www.pngeconomics.org blog) of the latest official numbers from the Bank of Papua New Guinea and the National Statistics Office.


The official numbers show Prime Minister Peter O’Neill, Treasurer Patrick Pruaitch and Finance Minister James Marape are telling lies when they say the economic is healthy and everything is under control.


Mr Flanagan says the recession began in early 2014, and the official numbers show that it is  continuing. This means Papua New Guineans’ standard of living has been falling since 2014.
In other words, O’Neill has wasted the riches flowing from PNG LNG and the three years of high GDP growth he experienced when he became Prime Minister.


Papua New Guineans are poorer today than they were at the start of 2014 because of O’Neill’s waste, corruption and mismanagement.
 

Flanagan estimates that people’s standard of living has fallen by at least 5% over the past two years.
This shocking news has only been picked up by Keith Jackson’s PNG Attitude blog and by former Prime Minister Sir Mekere Morauta in a media release yesterday.
PNG’s mainstream media will not publish this seriously bad news.


Because the facts revealed by Flanagan are so damaging, O’Neill and his gang are likely to attack his credibility and independence all over again.
So Flanagan has put his arguments in an extended blog post and has made the data available by request on his blog.


O’Neill has nowhere to hide and no-one else to blame.
Flanagan states that real GDP growth – adjusted for inflation – from the latest BoPNG and NSO numbers for 2014 and 2015 is minus 1.3%. The official estimate was plus 3.6%
BoPNG figures on leading economic indicators suggest that real GDP growth was between minus 3% and minus 5%.


The consequences are disastrous for Papua New Guineans:
• A major fall in employment of 7% over the past two years
• A decline in business sales – an extraordinary fall of 16% between September 2014 to September 2015, which will feed into more unemployment.
• A fall in lending to the private sector, undermining investment which in turn will also spur unemployment.


Employment has fallen in the Highlands by 23%, Southern by 21% and Morobe 14%.
In terms of national development, economic and financial management, O’Neill has been the worst Prime Minister in PNG’s history after his mentor Bill Skate.
His waste and corruption have hit the poorest people hardest – people in rural areas, including in his own electorate of Ialibu-Pangia.


The full extent of the harm that O’Neill has done to the economy and to the financial well-being of the people can be gauged by non-resources GDP – that is GDP produced by sectors such as agriculture, fishing, industry, retail and wholesale, services, etcetera.
Flanagan reports that the official figures represent minus 1.3% growth in real GDP.
Most people in rural areas depend upon agriculture and fisheries and small informal businesses to make a living.


Peter O’Neill’s -1.3% GDP rate compares with -2.3% between 1997 and 2001 (when his fellow PNC conman Bill Skate was PM), +2.6% for 2002-2006, and +7.7% for 2007-20012.
Given that PNG’s annual population growth rate is about 2.1% O’Neill is actually making people a whole lot poorer.


In the agriculture sector, because of a lack on encouragement and investment by the O’Neill regime, tea exports fell by 56% in 2014-15, rubber by 36%, 20% for cocoa and 12% for coffee.
Papua New Guinea needs to be creating jobs to cater for the large number of school leavers graduating each year and the high number of unemployed. This is especially true in rural areas.
Yet agriculture has suffered a 9% fall in employment.


O’Neill’s focus on spending to build showpiece infrastructure in Port Moresby and his decision to lock up LNG revenue as collateral for expensive overseas loans has taken its full toll.
Morauta says in his media release yesterday that O’Neill inherited strong GDP growth but has failed to convert it into any meaningful level of new goods and services.


”Instead he has wasted and mismanaged the national development potential that he has been presented with
“Mr O’Neill inherited a strong economy, growing by 11.1 percent in 2011, 8.0 percent in 2012 and 5.0 percent in 2013. But since then his short-sighted and reckless fiscal practices have wasted that advantage.
“Papua New Guinea has got nothing to show from that strong growth and the riches flowing from the start of production of PNG LNG, apart from a few unproductive showpiece projects in Port Moresby, and lavish hosting of international conferences attracting people like the dictator Robert Mugabe.
“The nation is deeper in debt than ever, service delivery continues to decline and public institutions – including all SOEs - are struggling.
“Public servants are not being paid their full entitlements on time. Businesses are not being paid debts owed by the Government, and are laying off staff.
“Businesses are crippled by the lack of foreign exchange – there are still reports of a backlog for foreign exchange orders by businesses amounting to billions of kina. Businesses are operating on the goodwill of their overseas suppliers who are owed months and months in arrears.
“Taken together with savage Budget cuts to essential services such as health, education and transport, it is no wonder the people are suffering like never before.”