Export volume to drop by 3pc
Papua New Guinea’s export volume this year is expected to decrease by three per cent due to weaker external demand for key commodities produced, according to World Bank PNG senior economist Ilyas Sarsenov.
“The price effect would be more substantial than the volume effect, leading to lower export revenue and lower current account surplus, compared to previous years,” he said.
While commenting on the country facilitating trade going forward, Sarsenov said the PNG National Trade Policy (2017-2032) had a good focus on improving trade performance via a comprehensive set of policy interventions.
“It would be important to implement all the measures prescribed in that policy, to improve efficiency and competitiveness of the domestic market and facilitate access of competitive export produce to external markets.”
According to the World Bank’s global economic prospects June 2020 analysis for East Asia and Pacific (EAP) released last week, the Covid-19 pandemic had taken a severe human and economic toll on the EAP, Papua New Guinea included.
It stated that regional growth was projected to slow sharply in 2020, to 0.5 per cent, down from 5.9 per cent in 2019 – the lowest rate since 1967 – reflecting impact of pandemic-related lockdowns, tighter financing conditions, and a deep contraction in exports.
“Sizable policy support will prevent a more severe deceleration,” it said.
“Although subject to significant uncertainty, regional growth is expected to rebound to 6.6 per cent in 2021 as the pandemic subsides, global import demand recovers and capital flows to the region normalise.
“However, the balance of risks to the outlook is firmly tilted to the downside.
“Key risks include a longer-than-expected duration of the pandemic, a prolonged period of heightened financial stress, and a sharper and longer than expected contraction in global trade compounded by re-escalating trade tensions.”
It noted the effects the Covid-19 had on the regional economy was through both domestic and external channels.
“Regional commodity exporters: Indonesia, Malaysia, Mongolia, Lao People’s Republic, Papua New Guinea, the Solomon Islands and Timor-Leste, were also hit by a sharp decline in commodity prices.”
It added that regional growth was expected to gradually recover during this year and return to around trend by late 2021.