The World Bank has released its Papua New Guinea (PNG) Economic Update for June 2025, offering a detailed analysis of the nation's economic landscape. The report highlights both the challenges and opportunities PNG faces in achieving sustainable growth, maintaining macro-fiscal stability, and advancing development amid global trade and policy uncertainties. A significant portion of the report is dedicated to exploring agriculture's potential to create jobs, boost exports, and diversify growth beyond PNG's traditional reliance on resources.
The update forecasts that PNG's economic growth will accelerate to 4.7 percent in 2025 from 3.8 percent in 2024, driven by increased production at key resource sites such as the Porgera gold and OK Tedi copper mines. The non-resource sector is also expected to contribute significantly due to improvements in agricultural output. However, growth is anticipated to slow down to around 3 percent over the medium term.
Agriculture remains a crucial sector for PNG, with potential benefits including job creation for women and youth, poverty reduction, enhanced access to essential services, and reduced dependence on resource sectors. "By helping subsistence smallholder farmers transition into commercial and semi-commercial agriculture," the report notes, these goals can be achieved.
Despite expected declines in commodity prices through 2025 and 2026, soaring gold prices coupled with increased production at Porgera may offset negative impacts on PNG's economy. A balanced budget is projected by 2027 as fiscal deficits narrow and public debt remains sustainable under planned fiscal consolidations.
Nevertheless, several risks could impact PNG’s economic outlook. These include slower global growth affecting demand for exports from major partners like Japan and China, unprecedented commodity price volatility impacting export revenues and reserves, political instability domestically, and climate change leading to more frequent extreme weather events.
To counter these risks, the government should focus on strategies that enhance macroeconomic stability while promoting private investment and job creation. Recommendations include increasing domestic revenue mobilization, reducing inefficient spending and borrowing costs, enhancing exchange rate flexibility, decreasing regulatory burdens on private investments, especially in non-resource sectors like agriculture.
Unlocking agriculture’s potential involves three strategic pathways: boosting productivity through investments supporting smallholders; scaling up value chain investments for targeted crops; strengthening systemic enablers by repurposing public investments towards research development (R&D), fostering public-private partnerships (PPP), and developing fair land access agreements.
For further details or updates on this report or related developments from World Bank Pacific can be accessed via their Facebook page or by downloading full reports online.
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