Papua New Guinea (PNG) has a remarkable diversity of geographic and natural resources. The country occupies the eastern half of the West Pacific island of New Guinea, together with the main islands of New Britain, New Ireland, and the Autonomous Region of Bougainville, as well as another 600 smaller islands and atolls.
PNG’s population of eight million people is young and growing. PNG’s growth trajectory and abundant resource potential provides a strong platform for greater economic engagement with Asia and beyond.
The country’s economy remains dominated by two broad sectors:
- the agricultural, forestry, and fishing sector that engages most of PNG’s labor force (the majority informally); and
the minerals and energy extraction sector that accounts for the majority of export earnings and GDP.
To diversify PNG’s sources of revenue and increase employment, investment is needed to strengthen capacity in institutions, human capital, and physical infrastructure like electricity, telecommunications, road and other transport infrastructure that remain critical to supporting private sector-led growth.
PNG has complex cultural dynamics deeply rooted in tribal and ethnic identity, traditional social institutions, and relationships to the land. These contribute both to the country’s unique challenges as well as its considerable resilience.
There are limited formal job opportunities for the growing, relatively young population, and other risks include environmental management, urbanization, political fragmentation, social exclusion, and inequalities in PNG’s resource dominated economy.
As a result of pandemic-related restrictions and weaker demand, it is estimated that PNG’s real GDP contracted by 3.8 percent in 2020. In March 2021, the World Bank forecasted that economic growth is expected to rebound to about 3.5 percent in 2021–22, but the economy will be nine percent smaller in 2023 compared to the World Bank’s pre-pandemic forecast.
With such a highly dispersed and remote population with 87% of Papua New Guineans living in rural areas, a significant COVID-19 outbreak in PNG (ongoing as of March 2021) has the potential to be devastating. The future resilience and economic growth of the country will depend on how its health system responds to the pandemic.
The World Bank continues to support the Government of PNG to strengthen macroeconomic management and improve service delivery to ensure development benefits reach Papua New Guineans, particularly the predominant proportion living in rural areas.
Last Updated: Apr 07, 2021