Papua New Guinea Economy Needs to Diversify

By Serah Aupong – EM TV News, Port Moresby

The 2016 Asian Development Bank (ADB) Economic Outlook reinforces the need for PNG to diversify its economy.

ADB’s flagship report was presented in Port Moresby yesterday.

The outlook reiterated commen’s that the large dependence on the extractive industry has made PNG vulnerable to global commodity prices and its unpredictability.

But the challenge in diversifying the economy lays in ensuring the cost of doing business in PNG remains affordable.

The Director of the Asian Development Bank, Joseph Zveglich Jnr, and ADB’s PNG Team Leader, Yurendra Basnett presented the report.

On the global front, while China is facing a downturn in their economy, more tourists from China are looking for places to visit. Unfortunately for PNG, at this stage, the country is not able to take advantage of this opportunity, unlike other Pacific countries.

Another important factor for PNG to take note of is the higher interest rate in the US market, which can have a negative impact on the ability of developing economies to service loans in foreign currencies.

While the rest of the Pacific’s economies like Fiji and Vanuatu were affected mainly because of natural disasters, for PNG the global commodity prices continue to be the major deciding factor. And again this calls for diversifying the economy, which points to the two sleeping giants, agriculture and tourism.

But they said for those industries to really take off, basic things such as ensuring a safe and cost effective environment to do business needs to be created.

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