13/03/2023
Papua New Guinea's economy is facing a major crisis as one of its oldest businesses, the Lae Biscuit Company has closed down for two weeks due to declining sales and profits.
Last month, massive fuel crises brought the country to stand still. Kina Bank, a leading Bank in PNG is looking offshore to invest other than in PNG according to CEO Greg Pawson.
All these are happening contrary to Prime Minister Jame Marape's continuous assurance of a growing economy.
We reported earlier on ADB's forecast of growth expected to accelerate steadily, with GDP expanding by 4.6% in 2023 as mineral extraction recovers and more normal global economic conditions return.
But on the ground, the story is different. Lae Biscuit Company chairman, Ian Chow, said that business has been down since December 2022, not only for them but for all manufacturers, as the country's grassroots population is struggling with a lack of spending power.
The closure of Lae Biscuit Company, which employs over 2,000 people and is one of the country's largest single factories, highlights the dire situation facing many businesses in Papua New Guinea.
The country's declining economy, exorbitant taxes, low foreign reserves, declining currency value, and deteriorating law and order situation are causing significant problems for businesses large and small.
Many businesses are facing a decline in sales and profits, and they are being forced to cut costs, including laying off workers, reducing capital spending, and scaling back community and social obligations.
Experts warn that unless the government takes significant steps to improve the business and investment climate in the country, the situation could get worse, and the economy could die a slow death.
The slow death of an economy occurs when a country experiences a prolonged decline in economic growth and development due to various factors such as poor economic policies, low productivity, high unemployment rates, and weak consumer spending.
The consequences of this situation are severe and long-lasting, leading to job losses, reduced funding for essential services, and a decline in the overall quality of life for citizens.
The effects of an economy dying a slow death can also include social unrest, political instability, and increased crime rates.
It is critical at this stage to address the underlying issues causing the decline in the economy to prevent the situation from worsening.
Governments and other stakeholders can implement policies and programs aimed at stimulating economic growth, reducing unemployment rates, and encouraging investment in the affected areas.
These measures may include tax incentives, infrastructure development, investment in education and training, and other initiatives that promote economic activity.
The slow death of an economy is a serious concern that requires immediate attention to prevent further deterioration of the economic situation and its consequences on citizens' lives.
