The Effect of the Global Financial Crisis and propagation of real shocks in PNG

The effect of the Global financial crisis and propagation of real shocks in PNG. pdf

This paper examines the propagation of real shocks, both external and internal,

and the different channels and mechanisms through which these shocks are

transmitted to the Papua New Guinea (PNG) economy. The increase in

globalisation and the interconnectedness with the other countries for trade and,

capital and financial flows have open up a lot of opportunities for PNG to import

technologies and goods (capital and consumption) that otherwise would have

been difficult to access. Since PNG is a small and open economy and very

dependent on international trade, it has become increasingly vulnerable to external

shocks. The global financial crisis in 2008 that resulted in global recession had

also affected PNG mainly through the trade sector. Given the widespread effect

of financial and economic losses and concerns about future shocks, this paper

seeks to share some light into the propagation of real shocks in PNG through

the various channels.