flag Papua New Guinea Papua New Guinea: Economic Outline

Economic Indicators

Since achieving independence in 1975, the economy has expanded more than threefold. However, real GDP per capita has only experienced an annual increase of 0.9%, a sluggish rate compared to similar resource-exporting nations in the lower middle-income category. The growth trajectory has been characterized by significant fluctuations, largely influenced by shifts in international commodity prices. The economic downturn triggered by the COVID-19 crisis resulted in a contraction during 2020-21, followed by a recovery of 5.2% in 2022. Growth slowed to 2.7% in 2023, primarily due to diminished global demand and domestic supply constraints resulting from scheduled maintenance in extractive facilities. The outlook for growth is more positive in 2024, largely attributed to the reopening of the Porgera gold mine. Operations at the mine resumed in the first quarter of 2024 and are expected to return to normal production levels by the middle of the year (data World Bank).

Papua New Guinea is richly endowed with natural resources, but exploitation has been hampered by rugged terrain, land tenure issues, and the high cost of developing infrastructure. The country’s economy remains dominated by agriculture, forestry, and fishing (16.9% of the GDP in 2022) - which engage most of the labor force - and the mineral and energy extraction sector (including copper, gold, and oil) which accounts for most export earnings and GDP (World Bank, 2022). The government intervenes in many aspects of the economy through state ownership and regulation. The IMF has stressed the need for more cautious macroeconomic policies to ensure debt sustainability and preserve external balances. Other areas of need include better public finance management and efficiency in public spending. The pandemic worsened existing fiscal vulnerabilities, prompting the government to initiate a gradual fiscal consolidation aimed at ensuring debt sustainability. As the economy rebounded to pre-pandemic levels, the government managed to decrease the fiscal deficit from 8.8% of GDP in 2020 to an estimated 4.4% of GDP in 2023. Headline inflation declined from 6.3% in 2022Q3 to 1.4% in 2023Q2, year-on-year, before rising slightly to 2.2% in 2023Q3. Core inflation followed a similar downward trajectory, reaching 1.3% in 2023Q3. Since September 2023, the Bank of PNG has lowered the policy rate three times, totaling 150 basis points, to 2%. With support from an IMF-funded program, BPNG implemented measures to introduce greater exchange rate flexibility, allowing for a gradual and moderate depreciation of the kina against the USD since May 2023 (data World Bank).

Papua New Guinea, one of the most diverse countries in the world, is a society undergoing economic and social transformation. The unemployment rate is low at 2.7% in 2023 (World Bank), but social tensions are fueled by inequality and poverty (almost 40% of the population). Papua New Guinea is classified as a lower middle-income country by the World Bank. 80% of the population is estimated to live in rural communities and are faced with significant challenges in health, education, and economic opportunity. The population is young and growing, and there are limited formal job opportunities for it.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 31.6131.0031.7232.6433.57
GDP (Constant Prices, Annual % Change) 5.22.74.53.73.5
GDP per Capita (USD) 2,6282,5252,5302,5512,570
General Government Gross Debt (in % of GDP) 48.352.152.152.050.9
Inflation Rate (%) 5.32.34.24.84.8
Current Account (billions USD) 5.285.153.864.694.40
Current Account (in % of GDP) 16.716.612.214.413.1

Source: IMF – World Economic Outlook Database - October 2021.

Note: (e) Estimated Data


 
Monetary Indicators 20162017201820192020
New Guinean Kina (PGK) - Average Annual Exchange Rate For 1 GHS 0.790.730.720.650.62

Source: World Bank - Latest available data.

 

Main Sectors of Industry

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 17.2 9.9 72.9
Value Added (in % of GDP) 18.8 33.0 44.0
Value Added (Annual % Change) 1.9 -7.5 -0.2

Source: World Bank - Latest available data.

 

The Active Population in Figures

201820192020
Labour Force 2,606,7232,661,6252,710,350

Source: International Labour Organization, ILOSTAT database

 
201720182019
Total activity rate 48.41%48.59%48.42%
Men activity rate 48.85%49.09%48.86%
Women activity rate 47.95%48.08%47.97%

Source: International Labour Organization, ILOSTAT database

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
58,9/100
World Rank:
103
Regional Rank:
19

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

See the country risk analysis provided by Coface.

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Partly Free
Political Freedom:
4/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
47/180

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Sources of General Economic Information

Main Online Newspapers and Portals
ABC News, Papua New Guinea News
The National
BBC News, Papua New Guinea
Online Newspapers, Papua New Guinea
Useful Resources
Department of Treasury
Department of Finance
Department of Commerce and Industry
Bank of Papua New Guinea
 
 

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Latest Update: May 2024