PNG PM James Marape Gotta Get Real


After a hiatus for the past two years due to COVID-19, PNG Update 2022 was held at the University of Papua New Guinea (UPNG) on October 20-21, co-hosted by UPNG School of Business & Public Policy and the Center for Development Policy at the Australian National University.

The PNG update came back with a bang. The conference room was full on the first day and remained almost full throughout the two days. Over 65 interesting articles and topics covering a wide range of PNG’s development challenges were discussed under the conference theme “Pathways to Development Amid COVID-19 and Beyond PNG’s 10th Election” .

Among the dignitaries was PNG Prime Minister James Marape, who opened the PNG 2022 update and delivered an impassioned speech on his government’s vision and policies, ranging from strengthening democracy, governance and institutions, investing in economic infrastructure, strengthening law and order and fighting corruption.

Prime Minister Marape’s key message was that Papua New Guineans should be optimistic about the country’s future, largely based on his ambition to double PNG’s gross domestic product (GDP) to 200 billion. by K.

GDP is the total monetary value of goods and services produced in a country, usually over the course of a year. In economics, there is a basic difference between nominal GDP and real GDP. Nominal GDP measures the value of goods and services produced in a country calculated using current or prevailing prices, while real GDP takes price movements into account using constant prices or the prices of a year of reference.

Since real GDP takes into account the impact of price changes (i.e. it is adjusted for inflation), it paints a more accurate picture of the performance of the economy. economy than nominal GDP. A change in real GDP reflects the real growth or decline in an economy’s production of goods and services over the course of a year. A higher nominal GDP does not necessarily mean the economy is growing, it may simply reflect inflation.

Typically, when economists assess a country’s economic performance from year to year, they do so in real terms. For example, according to the 2022 IMF Article IV report on PNG, the real growth rate of the PNG economy is expected to increase by 4.2% in 2022 and 4.7% in 2023, before growth slow to 3.0% over the next few years to 2027.

Prime Minister Marape did not say when he wanted the PNG economy to be K200 billion, but in other speeches he set the target date at 2030. In 2021, the estimated face value of the GDP was K93.3 billion. Reaching K200 billion by 2030 implies an average annual growth of 8.8%. But if inflation is 6%, that implies real growth of only 2.8%, which is only the rate of population growth. Moreover, the 8.8% growth is lower than the average annual nominal GDP growth from 1976 to 2018 (9.4%). In other words, 200 billion K by 2030 sounds impressive, but it isn’t.

Even real GDP growth may mean nothing if a country fails to successfully translate the proceeds of growth into improvements in key social services such as health, education, water and sanitation, nutrition and economic opportunities, which would improve the standard of living of its people. If real GDP growth simply means more profits for resource multinationals, how does that help PNG?

I have pointed out in the past how people are being left behind in rural PNG due to many years of government neglect leading to rural decay. Many rural Papua New Guineans are cut off from the outside world, while others have begun to migrate to cities in search of better opportunities; which, in turn, puts immense strain on the infrastructure of cities and adds to unemployment and crime, as towns and cities cannot cater to the burgeoning population.

Like Prime Minister Marape during the PNG Update 2022, successive governments have appealed to the goodwill of the people, asking them to be optimistic about the country’s future. And to the credit of their resilience, the people have endured many years of hardship, including rural decay and the pressures and challenges of a burgeoning population. However, knowing that the country is only a generation away from the depletion of its mineral resources, a basis must be given for any call for optimism. To insist on a number that means little or nothing to the country’s rural majority and urban poor does no one credit.

Prime Minister Marape’s treasurer, Ian Ling-Stuckey, said PNG’s best measure of economic livelihoods is “real non-resource GDP per capita”, which takes into account not only inflation (“real” ) and population growth (“per capita”). , but also the fact that only a small minority of PNG’s population works in the resource sector (“non-resource GDP”) . The treasurer is right. It is a much better indicator than nominal GDP.

It is good that Prime Minister Marape has come to the PNG 2022 update and is ready to engage with scholars and the public. It is also important that the points of view that he or any other politician puts forward are discussed critically. At the end of his speech, the Prime Minister asked for recommendations. My recommendation is that he stop talking about nominal GDP.

Watch PM James Marape deliver his speech at the opening of the PNG 2022 update, starting at 41:30 in the video.

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This research was undertaken with the support of the UNA-UPNG Partnership, an initiative of the PNG-Australia Partnership, funded by the Department of Foreign Affairs and Trade. Opinions are those of the author alone.


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