Photo credit: gailhampshire / Flickr
According to the World Bank, Papua New Guinea's GDP shrank by 3.9 per cent last year as a result of Coronavirus (Covid-19)-related limitations and lower demand.
The fiscal deficit increased to 8.9% of GDP, according to the bank's recent East Asia and Pacific Economic Update report, with income underperformance rather than a dramatic increase in spending being the major cause.
“Consequently, the debt-to-GDP ratio surged to an estimated 49.2 per cent.
To address transitory budgetary imbalances created by the Covid-19 epidemic, the revised Fiscal Responsibility Act raised the public debt cap from 45 to 60% of GDP for a five-year period, with the goal of returning to below 40% of GDP within ten years.
Falling gold and LNG output, as well as the reinstatement of Covid-19 limitations, have slowed economic recovery this year.
The Lihir, Simberi, and Hidden Valley mines all produced less gold in the first half of this year, while the Porgera mine remained closed.
Due to planned maintenance at the PNG LNG project, gas output was reduced.
Meanwhile, fresh waves of Covid-19 infections (95 per cent of the 18,000 total cases have been reported since February), delayed vaccine roll-out (only 0.4 per cent of the population is completely vaccinated), and related restrictions have hampered travel, reducing non-resource economic activities.
In mid-2021, inflation had slowed to 3.3% year on year.
The Bank of Papua New Guinea maintained its 3% interest rate.
According to three rounds of a World Bank mobile phone poll performed in June 2020, December 2020, and May 2021, the impact of Covid-19 on poor and vulnerable people' livelihoods was severe.
by December.
The agriculture industry saw the most job losses.
Despite modest improvement in the second half of 2020, overall employment fell by 28% between January and December of that year.
According to a preliminary analysis of the May poll, employment has been stable since the beginning of the year.
While the majority of families in the May poll said their income had remained unchanged since January, moreover a quarter said it had decreased or ceased altogether.
The majority of households were concerned about their financial situation in the coming month.
Overall, the poll findings point to a slowdown in economic recovery.
Reference: The National (29 September 2021). “Economy contracted by 3.9pc’
