Papua New Guinea economic survey: Transforming good luck into policies for long-term growth

The PNG economy has shown signs of recovery throughout 2003, with the rebound in GDP due to a combination of good weather and healthy prices for exports. The trade account is in surplus, and the construction, retail and wholesale sectors are experiencing positive growth. The current level of growth of output, however, is insufficient to bring about a rise in per capita income, which has been falling for the past decade. The budget is still in deficit despite the favourable conditions, public debt is at record levels, and political and policy instability remain of serious concern. This window of opportunity, therefore, must be used to improve the domestic environment for long-term growth. High on the list of policy priorities are a return to fiscal sustainability, efforts to reduce the costs of doing business, and a push to completing long-instituted reforms.