Papua New Guinea's economy is projected to grow by 4.7 percent in 2025, surpassing its historical average, according to the World Bank's latest Economic Update. The growth is attributed to increased gold and copper production and a strong recovery in agriculture. However, the report emphasizes that for sustained prosperity, reforms in the agricultural sector are essential.
The report highlights Papua New Guinea's resilience despite global uncertainties. It credits strong performances in both resource and non-resource sectors along with early fiscal reforms and monetary tightening as key factors contributing to economic stability.
"Despite global headwinds, PNG is charting a path forward," said Reshika Singh, World Bank Senior Economist for Papua New Guinea. "Higher gold production and renewed momentum in agriculture are lifting growth, but lasting, inclusive development will depend on greater efforts to bolster macroeconomic stability, stimulate private investment, and spur more and better jobs."
A significant focus of this year's report is on transforming the agriculture sector which supports over 85 percent of the population. The analysis suggests that enhancing productivity, connecting smallholders to markets, and attracting private investment could make agriculture a major driver of job creation, export growth, and poverty reduction.
"Investing in agriculture isn’t just smart economics—it’s about creating jobs, improving lives, and building resilience," said Khwima Nthara, World Bank Group Country Manager for Papua New Guinea. "With the right investments and reforms, PNG’s farmers can help lead the country’s next phase of development."
To realize this potential, the report recommends increasing smallholder productivity through improved seeds and farming practices; scaling up investments in value chains by enhancing infrastructure; and creating an enabling environment through fairer land access arrangements.
The country's fiscal performance has shown improvement with a narrowed fiscal deficit of 3.2 percent of GDP in 2024. Nonetheless, risks such as volatility in global commodity prices remain a concern. The report advocates for continued fiscal consolidation alongside structural reforms.
If these measures are maintained effectively, Papua New Guinea could achieve a balanced budget by 2027 while transitioning towards a more diversified economy. "This transformation must be anchored not just in what lies beneath the ground but in the country’s fertile land and entrepreneurial people," added Anuja Kar, World Bank Senior Agricultural Economist."This represents a pathway to reduce poverty, empower women and youth,and promote broader stability."