Papua New Guinea’s economic growth is projected to decelerate to 4.2per cent in 2025 and 3.8per cent in 2026, according to the Asian Development Bank’s (ADB) latest regional forecast released in early April 2025. The figures represent a modest slowdown from the 5.1per cent growth recorded in 2024, largely due to power shortages and external economic pressures.
The ADB cited persistent energy constraints, global commodity market volatility, and domestic logistical challenges as primary contributors to the forecast revision. Delays in key infrastructure projects and sporadic power outages have dampened private sector productivity.
Despite the slowdown, the ADB remains optimistic about PNG’s long-term potential. The non-resource economy, particularly agriculture, retail, and construction, is expected to remain resilient. The bank also highlighted the progress in public sector reforms and improvements in fiscal discipline as encouraging signs for macroeconomic stability.
Inflation is projected to decline to 5.3per cent in 2025, down from 6.7per cent in 2024, aided by a stronger kina and improved import logistics. However, the report stressed the importance of addressing foreign exchange shortages that continue to hamper investor confidence.
ADB Country Director David Hill said that targeted investment in electricity and digital infrastructure could reverse the trend. “PNG’s medium-term growth prospects remain intact, but accelerating reforms and infrastructure delivery will be key to sustaining momentum,” Hill noted.
The forecast recommends increased support for SMEs, women-led enterprises, and youth employment initiatives to help offset slowing growth in the extractive sector.
