Investment involves looking forward and assessing what might occur in the future. However, in order to look forward, one needs to consider long term historical trends. Accordingly, in this note some historical trends are reviewed, and some estimations about PNG are made.
Historical analysis is usually undertaken to clarify the underlying issues at hand, and the applications of such analysis are many, including investment. Bearing such an objective in mind, much is often made about very short term, and recent, developments in PNG, and such analysis can be counter-productive, because it tends to obfuscate the main objective of analysis, as noted above. However, if one stands back form short term analysis, and uses sensible comparators, then
historic analysis can be illuminating, especially in terms of what it can do to illuminate future developments; to provide the basis of investment decisions.
For example, low income countries help one assess the relative growth in GDP per capita, in PNG, as low income countries provide a broad based comparison to growth developments in other emerging market countries. As the below Figure indicates, PNG has generally been improving against low income countries for some time, although ther are variations evident from time to time. Economic difficulties, between 1994 and 2004, were just one such example.
Although the growth in income per capita has been strong, because the database currently available terminates in 2014, one cannot assess the impact of the recent slowdown, in terms of this broader improvement.