flag Papua New Guinea Papua New Guinea: Economic Outline

Economic Indicators

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Papua New Guinea has experienced steady growth over the past decade thanks to its dynamic extractive industries. According to IMF estimates, the economy rebounded in 2019 and reached 5.9% of GDP, underpinned by further large-scale projects. According to the updated IMF forecasts from October 2021, due to the outbreak of the COVID-19, GDP fell by -3.9% in 2020, and was expected to pick up to 1.2% in 2021 and 4% in 2022, subject to the post-pandemic global economic recovery.

Papua New Guinea is richly endowed with natural resources, but exploitation has been hampered by rugged terrain, land tenure issues, and the high cost of developing infrastructure. The country’s economy remains dominated by agriculture, forestry, and fishing (17% of the GDP in 2021) - which engage most of the labour force (56.2% of the total employment) - and the mineral and energy extraction sector (including copper, gold, and oil) which accounts for most export earnings and GDP (World Bank, 2022). The government intervenes in many aspects of the economy through state ownership and regulation. The IMF has stressed the need for more cautious macroeconomic policies to ensure debt sustainability and preserve external balances. Other areas of need include better public finance management and efficiency in public spending. Weak demand and improved agricultural supply have continued to contribute to an easing of inflation to around 3.7% in 2019, but it rose to 4.9% in 2020 and then reached 3.6% in 2021, with a forecast of 4.5% for 2022 (IMF, 2022). The country continues to face a shortage of foreign exchange, despite a large current account surplus (22.2% of GDP in 2021). Large resource export revenues are almost entirely offset by resource project debt repayments and dividends. Despite government efforts, fiscal deficit grew to 3.9% in 2019, progress on fiscal consolidation has stalled, and the debt-to-GDP ratio (48.9% in 2020 and 45.5% this year, according to IMF figures) is well above the medium-term target (Bank of Papua New Guinea, 2022).

Papua New Guinea, one of the most diverse countries in the world, is a society undergoing economic and social transformation. Unemployment rate is low at 3.5% in 2021 (World Bank, 2022), but social tensions are fuelled by inequality and poverty (almost 40% of the population). Papua New Guinea is classified as a lower middle-income country by the World Bank. 80% of the population is estimated to live in rural communities and are faced with significant challenges in health, education and economic opportunity. The population is young and growing, and there are limited formal job opportunities for it.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 24.8323.28e26.4628.3130.01
GDP (Constant Prices, Annual % Change) 5.9e-3.9e1.24.03.4
GDP per Capita (USD) 2,8872,651e2,9523,0943,212
General Government Gross Debt (in % of GDP) 40.048.945.549.150.1
Inflation Rate (%) 3.7e4.93.64.54.0
Current Account (billions USD) 5.003.08e5.865.985.69
Current Account (in % of GDP) 20.113.2e22.221.119.0

Source: IMF – World Economic Outlook Database - October 2021.

Note: (e) Estimated Data


 
Monetary Indicators 20162017201820192020
New Guinean Kina (PGK) - Average Annual Exchange Rate For 1 GBP 4.234.104.374.254.44

Source: World Bank - Latest available data.

 

Main Sectors of Industry

Agriculture accounted for 22.1% of GDP in 2016 and included coffee, cocoa, copra, palm kernels, tea, sugar, rubber, sweet potatoes, fruit, vegetables, vanilla, poultry, pork, and shellfish.

Industry accounted for 42.9% of GDP in 2017 and included copra crushing, palm oil processing, plywood production, wood chip production, mining (gold, silver, copper), crude oil and petroleum products, construction, tourism, livestock, dairy products, spice products (turmeric, vanilla, ginger, cardamom, chili, pepper, citronella, nutmeg), and fish products.

Services accounted for the remaining 35% of GDP in 2017.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 56.2 13.2 30.6
Value Added (in % of GDP) 17.0 36.9 41.6
Value Added (Annual % Change) 4.6 -7.5 5.1

Source: World Bank - Latest available data.

 

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The Active Population in Figures

201820192020
Labour Force 2,606,7232,661,6252,710,350

Source: International Labour Organization, ILOSTAT database

 
201720182019
Total activity rate 48.41%48.59%48.42%
Men activity rate 48.85%49.09%48.86%
Women activity rate 47.95%48.08%47.97%

Source: International Labour Organization, ILOSTAT database

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
58,9/100
World Rank:
103
Regional Rank:
19

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

See the country risk analysis provided by Coface.

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Partly Free
Political Freedom:
4/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
47/180

Source: World Press Freedom Index, Reporters Without Borders

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Sources of General Economic Information

Main Online Newspapers and Portals
ABC News, Papua New Guinea News
Papua New Guinea Newspapers and News Sites
The National
Papua New Guinea Newspapers online
BBC News, Papua New Guinea
Useful Resources
Department of Treasury
Department of Finance
Department of Commerce and Industry
Bank of Papua New Guinea
 
 

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Latest Update: June 2022

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