PNG Economy Showing Signs of Recovery in an Uncertain Global Environment: World Bank
World Bank’s latest Economic Update for Papua New Guinea predicts a rebound in growth and considers PNG’s agricultural sector as a potential key economic driver in the years ahead
The economy of Papua New Guinea (PNG) has begun recovering from a series of external shocks, but global economic uncertainties are mounting, according to a report released by the World Bank today.
The report, Papua New Guinea Economic Update: Recovery Amid Uncertainty, says that to increase the resilience of the economy, the government should continue pursuing its structural transformation agenda for more inclusive and sustainable development of the country, with agriculture as one of the priority sectors.
The report was launched in the PNG capital Port Moresby today and is the third in the current series of the World Bank’s Economic Updates, reviewing recent developments in PNG’s economy and providing an in-depth examination of a selected development issue in PNG.
This report has a special focus on PNG’s agricultural sector and its potential as a key economic driver in the years ahead.
The new report says that signs of growth are returning in PNG, following a recovery in production in the resource sector.
GDP growth is estimated to jump from -0.5 percent in 2018 to 5.6 percent in 2019 and is projected to hover between 3.1 and 3.5 percent in 2020-21, supported by proposed investments in several large resource projects. As observed during the previous construction boom in the resource sector, the current pressure on the exchange rate may reverse in the coming years. Meanwhile, growth in the non-resource economy remains subdued due to sluggish domestic demand, leading to lower inflation. “PNG’s growth outlook remains positive but fragile due to rising economic uncertainties ranging from the domestic political economy to the recent escalation of trade tensions between the United States and China,” said Ilyas Sarsenov, World Bank Senior Country Economist for Papua New Guinea. “To mitigate downside risks to the outlook and better weather external shocks, it is recommended that PNG authorities adjust macroeconomic policy and focus on structural transformation of the economy, especially in agriculture as a potential economic driver for more diversified and inclusive development.”