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PRESS RELEASE July 26, 2019

PNG Economy Showing Signs of Recovery in an Uncertain Global Environment: World Bank

World Bank’s latest Economic Update for Papua New Guinea predicts a rebound in growth and considers PNG’s agricultural sector as a potential key economic driver in the years ahead

PORT MORESBY, 26 July 2019 – The economy of Papua New Guinea (PNG) has begun recovering from a series of external shocks, but global economic uncertainties are mounting, according to a report released by the World Bank today.

The report, Papua New Guinea Economic Update: Recovery Amid Uncertainty, says that to increase the resilience of the economy, the government should continue pursuing its structural transformation agenda for more inclusive and sustainable development of the country, with agriculture as one of the priority sectors.

The report was launched in the PNG capital Port Moresby today and is the third in the current series of the World Bank’s Economic Updates, reviewing recent developments in PNG’s economy and providing an in-depth examination of a selected development issue in PNG. This report has a special focus on PNG’s agricultural sector and its potential as a key economic driver in the years ahead.

The new report says that signs of growth are returning in PNG, following a recovery in production in the resource sector. GDP growth is estimated to jump from -0.5 percent in 2018 to 5.6 percent in 2019 and is projected to hover between 3.1 and 3.5 percent in 2020-21, supported by proposed investments in several large resource projects. As observed during the previous construction boom in the resource sector, the current pressure on the exchange rate may reverse in the coming years. Meanwhile, growth in the non-resource economy remains subdued due to sluggish domestic demand, leading to lower inflation.

“PNG’s growth outlook remains positive but fragile due to rising economic uncertainties ranging from the domestic political economy to the recent escalation of trade tensions between the United States and China,” said Ilyas Sarsenov, World Bank Senior Country Economist for Papua New Guinea. “To mitigate downside risks to the outlook and better weather external shocks, it is recommended that PNG authorities adjust macroeconomic policy and focus on structural transformation of the economy, especially in agriculture as a potential economic driver for more diversified and inclusive development.”

The report includes a close look at PNG’s agriculture sector as a key economic generation activity that is expected to thrive in coming years through increased private sector partnership support for small-scale farmers, particularly given that most of PNG’s population lives in rural areas currently working in farming for cash income.

The report recommends that PNG authorities focus on improving cooperation and institutional capacity through greater agricultural public-private partnerships to support this sector to realize its vast potential for the country. This is in line with the PNG government’s Medium-Term Development Plan III which focuses on developing physical and human capital and strengthening governance and institutions for critical areas and priority sectors, including agriculture.

“The key to unlocking the full potential in agriculture lies in how smallholders are organised and supported to transform the sector,” said Allan Tobalbal Oliver, World Bank Senior Agricultural Specialist. “Today, the World Bank funded Productive Partnership Agriculture Project supports more than 67,000 coffee and cocoa farmers across twelve provinces, providing them access to markets and aligning them with latest policy and requirements.”

This unique partnership has seen an increase in net income of smallholder coffee and cocoa growers by 40 percent. This includes more than 24,000 women who are being supported to take greater ownership and responsibility in the production and sale of coffee and cocoa across the country.


Port Moresby
Lydia Kaia
+675 70080910
Tom Perry
+61 404 460 330