A World Bank Report released on Thursday has indicated that PNG’s economy is forecast to accelerate in 2024 after a slowdown last year, yet greater investment in education is critical to the country’s long-term economic future.
According to the report, economic growth is expected to rise to 4.8% this year from 2.7% in 2023 after the reopening of the Porgera gold mine, but growth is expected to remain below its pre-pandemic trajectory.
Papua New Guinea’s economy is gradually recovering from the impacts of the pandemic and economic growth is expected to accelerate in 2024 due to the resumption of the Porgera gold mine, although growth could have been higher if not for the riots and looting in January and fuel supply disruptions.
World Bank Senior Economist for Papua New Guinea, Ruslan Piontkivsky when giving his speech at the World Bank Economic Update in Port Moresby on Thursday said macroeconomic policies have improved with the government carrying out fiscal consolidation plans to reduce risks of debt distress and the Bank of PNG allowing more exchange rate flexibility.
“The COVID-19 crisis led to an economic contraction in 2020-21 before recovering by 5.2 percent in 2022. The recovery in the extractive sector was driven by significant improvement in international prices of key export commodities, although the shutdown of the Porgera gold mine limited the rebound.
“Growth is estimated to have slowed down to 2.7 percent in 2023, primarily attributed to reduced global demand and domestic supply constraints stemming from scheduled maintenance in extractive facilities.”
While the economy is recovering, the analysis underscores that the benefits of growth in PNG over the last decade have not been shared by all, and the poorest in Papua New Guinea have not seen significant welfare improvements.
Meanwhile, according to the latest World Bank–IMF DSA, the country remains at high risk of debt distress depending on the implementation of the Government’s plans for further fiscal consolidation and conservative financing strategies.