According to the Asian Development Outlook (ADO) April 2024, Asian Development Bank’s flagship economic publication, PNG’s economy is expected to improve in 2024 and 2025.
The report stated that, the positive outlook is driven by improved prospects for the mining sector, the sub-region’s largest economy. Growth slowed to 2.0% in 2023 due to decreased production in the resource sector, but the report says PNG’s economy is set to grow by 3.3% in 2024 due to resumption of production at the Porgera gold mine. The medium-term outlook for PNG’s economy remains positive, with growth in 2025 forecast to further expand to 4.6%.
ADB Country Director for Papua New Guinea Said Zaidansyah pointed out that while the medium-term outlook for PNG’s economy remains positive, there are looming challenges.
“Foreign exchange restrictions and frequent power disruptions continue to dampen activity in the rest of the economy and the fallout from civil unrest in January also clouds the outlook,” Zaidansyah expressed.
The ADB report says reforms to improve the power sector’s financial sustainability and generation infrastructure, including increased use of renewable energy and private sector investment are needed to help address power supply constraints on growth. ADB’s financing plan will include support to address this.
ADB is hopeful that foreign exchange restrictions, the foremost business constraint for PNG, could ease under a new International Monetary Fund-led program to be established this year. The reopening of the Porgera gold mine should also create additional operation-related spending on goods and services and employment, as well as provide foreign exchange inflows.
Meanwhile inflation is expected to rise from 2.3% in 2023 to 4.5% in 2024, and then pick up even further to 4.8% in 2025 largely because of continued exchange rate depreciation and impact of the recent civil unrest. Costs for many consumer goods have soared, with prices for food and non-alcoholic beverages rising by 7% in 2023.
ADB is one of PNG’s largest sources of official development assistance, with a portfolio of about $1.38 billion.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty.
