World Bank’s Economic Update finds strengthening the agriculture sector will spur opportunity and diversify growth
PORT MORESBY, June 30, 2025 - Papua New Guinea’s economy is set to grow by 4.7 percent in 2025, well above its historical average, driven by rising gold and copper production and a strong recovery in agriculture. But amid global commodity price volatility and persistent domestic challenges, the country’s long-term prosperity will depend, in part, on improving the critical agricultural sector.
The latest Papua New Guinea Economic Update, released today by the World Bank, highlights the country’s resilience amid global uncertainty. The report credits strong performance in both the resource and non-resource sectors alongside early gains from fiscal reforms and monetary tightening.
“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 special focus in this year’s report makes the economic case for transforming PNG’s agriculture sector, which supports the livelihoods of over 85 percent of the population. The analysis shows that by improving productivity, connecting smallholders to markets, and attracting private investment, agriculture can become a powerful engine for 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 unlock this potential, the report recommends boosting smallholder productivity through improved seeds, farming practices and extension services; scaling up investments in value chains by enhancing infrastructure and post-harvest processing; and creating a stronger enabling environment through fairer land access arrangements and better public-private partnerships.
The report finds that the country’s fiscal performance continues to improve as PNG’s fiscal deficit narrowed to 3.2 percent of GDP in 2024. However, risks remain including volatility in global commodity prices, foreign exchange shortages, and growing climate-related threats. The report calls for continued fiscal consolidation, deeper structural reforms, and smarter investments in education and health to sustain growth and stability.
If fiscal and structural reforms stay on track, PNG could achieve a balanced budget by 2027 and shift toward a more inclusive, 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.”
