Papua New Guinea (PNG) faces economic challenges and opportunities. The country’s economy has expanded by an average of 3.2% over the last 40 years, but its per capita income growth has been modest, with an average annual growth rate of only 0.9%. To achieve stronger and more inclusive economic growth, PNG should seek to maintain greater economic stability, boost productivity, and nurture human capital. The government of Papua New Guinea must urgently deliver comprehensive programs to improve training, education, and employment opportunities for its large population of young people to achieve and sustain stability and productivity.
Challenges for macroeconomic stability, for Papua New Guinea, and the high risk of debt distress could negatively affect the country’s economic growth. Despite the economic challenges, PNG’s economy is forecast to grow by 2% in 2023 and 2.6% in 2024, and the government’s spending initiatives and improved liquefied natural gas production contribute to the positive outlook
Papua New Guinea faces significant infrastructure challenges that impact the business environment. The mountainous terrain and lack of transportation networks make development difficult and increase costs. Upgrading PNG’s ports, roads, airports and digital connectivity would stimulate economic activity but major investments are required in Papua New Guinea. These infrastructure bottlenecks pose ongoing difficulties for attracting investment and expanding trade. At the same time– Papua New Guinea has abundant natural resources that could drive growth if developed sustainably. While mining and oil and gas have dominated historically, there is potential to further explore PNG’s mineral and energy reserves. Renewable energy generation from hydro, geothermal and solar could also diversify the energy sector over the long term.
A second major challenge is developing PNG’s human capital. Low levels of education leave many local businesses struggling to find qualified workers. Skills shortages are prevalent in both technical and managerial roles. Investing in technical and vocational education programs tailored to priority industries would help address this constraint and boost productivity. With the right training opportunities, Papua New Guinea’s growing youth population could become an economic asset rather than liability. Beyond resources and skills development, PNG’s domestic market is also expanding. Rapid population growth provides opportunities for agriculture, manufacturing and services oriented around basic consumer needs.
