Papua New Guinea’s population of 7.5 million is young and growing. The country is rich with a vast endowment of natural resources and geographic proximity to rapidly growing Asian markets. Its population is strikingly diverse, speaking over 800 distinct languages.
Economically, despite some recent diversification, PNG’s economy remains dominated by two sectors: the agricultural, forestry and fishing sector, which engages most of the labor force (the majority informally); and the minerals and energy extraction sector which accounts for the majority of export earnings and Gross Domestic Product (GDP).
The successful development of the US$19 billion ExxonMobil LNG investment in 2014 ahead of schedule and within budget is expected to provide significant boost to PNG’s overall GDP. Yet while exports from this project will eventually provide revenue to the state, they are unlikely to be felt in the short term. Non-mining GDP was forecast to grow by 2.9%in 2016, supported by a rebound in the construction sector.
To diversify PNG’s asset base and increase employment, investment is needed to strengthen capacity in institutions and physical infrastructure. Electricity, telecommunications, road and other transport infrastructure remain critical to enabling private sector-led growth.
Translating macroeconomic performance and revenues from the extractive industry into strong, tangible improvements to living standards for all Papua New Guineans remains the key challenge for the Government of PNG, yet other challenges are also immense. Improving public financial management, efficiency of public spending and service delivery, raising the performance of the civil service, and improving transparency and accountability in budget management will be crucial in converting resources revenue into inclusive growth and, consequently, a genuine improvement in the livelihoods of ordinary Papua New Guineans.
Last Updated: Apr 14, 2016