PNG Faces 36% Decline in Buying Power, East Sepik Governor Warns

​PNG faces a 36 percent decline in buying power, warns East Sepik Governor Allan Bird, citing real GDP data that indicates a significant economic downturn of approximately K40 billion.

In response to the 2023 GDP report released by the National Statistics Office last week, Bird pointed out that the government’s portrayal of economic growth was misleading. While the government claimed that the economy had grown by around K110 billion, Bird argued that this figure only reflected nominal GDP, or current prices, rather than real GDP, which adjusts for inflation.

Bird highlighted that the nominal GDP increase was largely driven by government borrowing and the printing of money, without a corresponding rise in real GDP, meaning there was little to no actual gain in buying power. “There is simply no buying power,” he said, criticizing Prime Minister James Marape’s reliance on nominal GDP figures to promote the country’s economic health.

The real GDP, according to Bird, only saw a five percent increase from 2019 to 2023, reaching K69 billion—indicating a shortfall of around K40 billion. Bird noted that while nominal GDP might appear to grow, real output in terms of goods and services was, in fact, shrinking.

Emphasizing the importance of real GDP as a measure of actual economic value after accounting for inflation and depreciation, Bird called on the government to address the widening gap between nominal and real GDP. He warned that if the government continued along this trajectory, the economic disparity would only worsen.

Bird urged the government to focus on true economic management rather than distributing benefits to maintain political standing, cautioning that without a substantial shift in economic strategy, PNG risks becoming one of the poorest nations within a decade.

Also read

• PNG Tourism Minister Condemns Attack on Australian Tourists in Rabaul
• PNG Government Urged to Consider Two-Child Policy Amid Healthcare Strain
• PM Marape Looks Forward to Strengthening PNG-U.S. Ties under President-elect Trump
• Inquiry Reveals PNG Police Officers Illegally Requesting Fuel Money for Arrests