Bank of PNG: GDP Declines by 4%
Because of the economic downturn brought about by the global health crisis, the Bank of Papua New Guinea has revised its outlook on the gross domestic product (GDP) to decline by 4%, a downward spiral from its original projection last March 2020 of 0.3 per cent.
This decline is also brought about by the imposing of State Emergency, lockdown and various policies and programs to contain the virus, thus affecting economic growth. The Central Bank expects that the impact of COVID-19 will continue for the rest of 2020 and into 2021.
In a statement, the Central Bank said that this revision mirrors the negative growth in PNG’s major trading partners, as well as the containment measures instituted by the government and temporary shutdown of major mining operations. “The closure of Porgera mine since April, 2020 due to the expiry and non-renewal of the Special Mining Lease for the operator, Barrick (Niugini) Limited, also contributed to this negative growth,” it said, “In the non-mineral sector, most sectors are expected to record lower growth.”
The Central Bank also noted that among the most affected include hotels, financial and insurance services, construction, and transportation.
“To maintain their operations, most firms have reduced their costs by laying off workers, reducing working hours and delaying investment plans,” the bank stated in a statement.
In the first six months since the pandemic started, the Bank conducted a survey to evaluate the impact of COVID=19 to businesses, particularly the Micro, Small, and Medium Enterprises (MSMEs) in the sectors of manufacturing, construction, professional, and information services. The bank found out that over two-thirds have scaled down their operations while the rest survey closed their businesses and expected to continue for the rest of the year.
The bank stated, “MSMEs experienced disruptions in their supply chains and cash flow, lower demand, reduced workforce and increased arrears to service providers and on loans.”