Papua New Guinea’s (PNG) economy is forecast to grow by 2% in 2023 and 2.6% in 2024 amid challenges in various fronts, says the Asian Development Outlook (ADO) September 2023.
Difficulties in accessing foreign exchange, power and water supply disruptions, frequent domestic flight cancelations, and issues in the banking sector are some of the economic challenges the subregion’s largest economy is facing. In addition, the mining industry's contribution to growth weakened due to lower gold production. The ADB report also says import volumes plunged by 61% year-on-year in the first quarter, indicating delays in private investments.
“The government must be commended for initiating an IMF-supported reform agenda to help address macroeconomic policy challenges,” said ADB Country Director for PNG Said Zaidansyah. “The reforms aim to enhance debt sustainability and improve governance by strengthening PNG’s anticorruption framework.”
The inflation forecast is retained at 5% for 2023 and 2024.
The ADO September 2023, notes that while economic challenges remain, sectors such as international travel-related services, communication, and real estate are showing resilience. Government spending initiatives and improved liquified natural gas production contribute to the positive outlook.
The report says PNG’s economy faces significant upside potential related to Porgera Gold Mine’s reopening and the announcement of a final investment decision for Papua LNG that is expected in early 2024. Start of these resource projects will likely stimulate economic activity, boost tax revenue, and help alleviate foreign exchange shortages.
ADB is committed to assisting the government with its Connect PNG Plan which aims for complete countrywide road connectivity by 2040. This will give market access to previously remote and underserved areas, which will promote economic diversification and job creation in non-resource sectors such as agriculture, construction, and tourism. ADB is also working in other sectors such as energy, education, and health. In addition, ADB also provides support on public sector strengthening in PNG including through governance reform of state-owned enterprises and public financial management.