Photo credit: Christine Gneh
According to a new World Bank estimate, Papua New Guinea's GDP is expected to increase by 4% in 2022, owing mostly to expansion in the extractives industry.
The research, PNG Economic Update: Navigating a Fragile Recovery, examined major recent changes in PNG's economy and placed them in a longer-term and global perspective, forecasting that the GDP will expand by 1% in 2021 after shrinking by 3.5 percent in 2020. The scheduled reopening of the Porgera gold mine is expected to be the key engine of gross domestic product (GDP) growth this year, with an estimated four percent rise.
However, the analysis predicted that PNG's total medium-term growth will be harmed by global uncertainty.
Despite its economic output not being as severely hit as many other East Asian and Pacific nations, PNG is anticipated to suffer significant problems from the Coronavirus (Covid-19) pandemic, according to the research.
While local agriculture output remained unaffected by the pandemic, PNG's total GDP growth lagged behind global and regional norms, with performance further hampered by decreased gold and liquefied natural gas (LNG) production, according to the latest study.
“The biggest challenge for the PNG economy this year will be navigating a fragile recovery; this is particularly challenging while uncertainty remains high,” World Bank country economist for PNG Ruslan Piontkivsky said.
“A sound fiscal consolidation strategy – one focused on mobilising domestic revenue to decrease the medium-term fiscal deficit – is vital for PNG,” he said.
“This will be important to navigate while also prioritising improvements to the delivery of public services.” According to the new research, Papua New Guinea should strive to strengthen the credibility of the yearly budget process and guarantee that resource-related enterprises contribute money to PNG's budget in order to achieve fiscal sustainability.
Further changes to PNG's tax policy and administration, according to the research, will eventually assist to lower the country's debt load.
Reference: The National (7 March 2022). “Economy to grow by 4pc: Bank”.
