What Is The Current 'Technical Limit Capacity' Of Our PNG Economy?

Economics is the language of business and government as well as politicians like to speak 'business economics'. Below is an abstract example of politicians talking economics.

It is good to have the politicians debate qualitatively and talk about the economy. But if they give us the quantitative measure or an economic scorecard of the variables of economy management which will form the framework around which they will form their debate or narrations, then it will make such debates and strategy discourses more meaningful. The key to strategy discourse is narrative but we must go to that narrative with a framework. A framework can be a mental picture or diagram that we will base or reference our talk around.

Using the 'economic cycle' and the 'money transmission mechanisms' as frameworks or as reference baseline understandings to guide one in forming an opinion on such debates, here are some facts about economy management: when we pass a deficit budget, there will be more borrowings; governments must spend into the economy as part of the aggregate demand to stimulate the economy; inflation is directly proportional to GDP.

Depending on which side is making the statement on the performance of the economy, they may opt to trumpet only the negative side or the positive side that suits their agenda and to sway our views.

Whatever our views may be, the fundamental thing to note is this: the objective of any government in managing the economy is to ensure that we do not go down too deep and stay in the trough of the economic/business cycle too long.

Therefore, what we need is a government scorecard stating or outlining these quantifiable variables in the management of the economy so we can know the deviations and when the pollies debate then we can tell whether these political rhetorics have merit or are just blowing out hot air and are far off the mark from the technical limit capacity of the economy.

The technical limit capacity is the design capacity of a process and how much that process can actually produce due to the real constraints or limitations that are existing in the value chain. Understanding and establishing the inherent technical limit capacity will help us to forecast and manage demand. Understanding the technical limit capacity of the economy will help in the balancing demand and capacity debates.

Remember: high inflation and more borrowings (as a result of Current Account being deficit) are also signs of the economy doing well on GDP (and this depends on which side or perspective you are seeing things or opt to see things from).