Viewpoint: Jonathan Seeto, Territory Senior Partner
In 2017 we predicted that the businesses of Papua New Guinea would be optimistic, despite the challenging year that lay ahead. Thinking about the coming period, we continue to be concerned with how the economy can deliver effectively for our society as we learn how to operate in an environment of fiscal management challenges and growing societal needs.
It is fair to say that for most of the economy, the reasons for hopefulness that were identified by business leaders just one year ago continue to remain out of reach. However, gauging the level of confidence from a traditional lens can also lead to missing out on recognising other aspects of the PNG economy that show potential. In fact there are a number of bright spots to look to in the short- to medium term, and these areas deserve to be acknowledged.
One of the inspiring facets of the PNG economy is the drive and innovation of those exploring ways to navigate out of this situation. Although the effects might not be fully visible, they are an encouraging sign for the future. I am reminded of the old adage: if you change the way you look at things, the things you look at change. We need to do more of this.
While Port Moresby is not necessarily a barometer for PNG, progress often begins in Port Moresby before it is replicated elsewhere. It also follows that if Port Moresby is not vibrant with activity, then we can expect less activity outside of it.
Looking at the different sectors of the Port Moresby economy, we are seeing glimmers of entrepreneurial spirit as new entrants – and some of the more established businesses – vie for opportunities created by some of our social trends, including the need for affordable housing and the demand for power and energy, improved telecommunications, health services, food and consumer goods, among others. We are seeing the emergence of a new market dynamic with participants we have not seen before. We are also seeing innovation, particularly from the financial services sector and from our technology savvy younger demographic who are participating in the innovation economy in areas such as e-commerce and artificial intelligence. We can also find innovation in the more traditional sectors, such as agriculture, with the development of new, consistent sources of supply for market fruits and vegetables, domestically cultivated rice, alongside new ventures into the dairy industry. Inroads are also being made in the provision of affordable housing through the actions of private developers.
What we are seeing, and arguably not entirely by design, is that we are creating engines that are fuelling inclusive growth. Indeed, the informal economy appears to thrive in these conditions, although this success is not fully captured in economic indicators. So while there appear to be investment opportunities, there is still potential for significant improvement around enabling more inclusive growth – how and if that happens depends on how governments, businesses and society will work together.
Recent PwC forecasts indicate that the average projected GDP growth for PNG between 2018 and 2050 is around 4.4% per year, and while this is just below PNG’s most recent 15-year GDP average of 4.7%, it is still an impressive number for long-term growth. It is also somewhat higher than the projection for most countries in the region and is a positive story in a world where growth seems elusive.
The basis for the long-term positive trends come from PNG’s natural resources and the ongoing potential for the demographic dividend that comes from a relatively youthful population. However, in order to achieve our potential for growth, there needs to be continued investment in education, infrastructure and innovation, as well as improvements in governance and steps to diversify the economy gradually to reduce our dependence on the resources sector, which is subject to global commodity price volatility.
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