ASIATODAY.ID, PORT MORESBY — Papua New Guinea’s (PNG) economic growth is projected to moderate to 4.2% in 2025 and 3.8% in 2026, following a rebound to 4.3% in 2024. The slowdown comes amid persistent development challenges and increasing global trade uncertainties, according to the Asian Development Outlook (ADO) April 2025 released by the Asian Development Bank (ADB).
The report attributes the moderation to ongoing power blackouts, security issues, potential grey listing, and a high cost of doing business. These internal pressures are further intensified by global trade tensions and rising geoeconomic risks.
While the forecast was finalized before the U.S. administration’s new tariff announcement on 2 April 2025, ADO April includes an analytical outlook on the possible effects of higher U.S. tariffs on Asia-Pacific economies.
“Although the region remains resilient, unexpected shifts in U.S. trade and economic policy—along with retaliatory responses—could dampen trade, investment, and GDP growth,” the report notes.
Papua New Guinea saw inflation drop to a record low of 0.7% in 2024, largely due to a sharp fall in volatile betel nut prices. However, elevated prices for essential goods such as food, clothing, and footwear continue to strain households and are expected to persist in 2025.
Inflation is forecast to rise to 3.8% in 2025 and 4.3% in 2026, as price pressures return and one-off deflationary factors subside.
The reopening of the Porgera Gold Mine in 2024 brought optimism, though its operations were disrupted by landslides and civil unrest. Despite that, the mine is expected to be a key driver of economic growth in 2025 as production ramps up.
Meanwhile, LNG output weakened in 2024 due to lower production volumes and price volatility—trends likely to continue into 2025. On the brighter side, PNG’s exports of coffee, cocoa, copper, copra, and fish remained strong, bolstered by favorable global prices.
ADB praised the PNG government for progress in implementing macroeconomic reforms, especially in boosting domestic revenue and reducing the fiscal deficit. However, the bank emphasized the need for further action to build internal economic resilience.
“The government should be commended for its reform efforts. But with increasing external shocks, strengthening domestic economic foundations must be a top priority,” said Said Zaidansyah, ADB Country Director for Papua New Guinea.
The report also highlights that continued improvement in foreign exchange availability and a gradual reduction in PNG’s import backlog are helping to improve conditions for the private sector.
As one of the region’s key development partners, the Asian Development Bank remains committed to supporting inclusive, resilient, and sustainable growth. Founded in 1966 and owned by 69 members—49 from the region—ADB combines innovative financial instruments with strategic partnerships to address complex development challenges and improve lives across Asia and the Pacific. (AT Network)
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