Westpac Bank has slightly lowered its 2025 GDP growth forecast for Papua New Guinea, citing short-term headwinds such as weak export earnings, logistical constraints, and public sector cash flow issues. However, the bank remains optimistic about PNG’s medium-term prospects, supported by anticipated resource projects and ongoing policy reforms.
The revised forecast, released on 7 July, places expected growth at 3.6 per cent, compared with the earlier projection of 4.1 per cent. According to Westpac analysts, contributing factors include softer-than-expected gold and copper prices, continued delays in project implementation, and elevated inflation, which is dampening household spending.
Despite the downgrade, Westpac believes that Papua New Guinea is well placed to benefit from a pipeline of major resource projects, including Papua LNG, P’nyang, and Frieda River, assuming they proceed as planned. The report also highlighted a growing services sector and strong urban demand as positive signs.
Helen Tolo, Westpac’s Pacific Economist, said that although global uncertainty had affected short-term momentum, the underlying fundamentals of PNG’s economy remain sound. “We are seeing early progress in structural reforms, improvements in the governance of state-owned enterprises, and increased focus on capital investment, all of which point to improved stability,” she noted.
The report commended the Bank of Papua New Guinea for its recent monetary tightening measures, which have helped to stabilise inflation expectations. However, it also emphasised the importance of fiscal discipline and more effective debt management to reduce long-term risks to the economy.
Business leaders have responded with cautious optimism. The Manufacturers Council of Papua New Guinea reiterated the need for better foreign exchange availability and clearer tax policies to restore business confidence.
Although the downward revision may temper expectations in the near term, Westpac’s continued belief in Papua New Guinea’s growth trajectory suggests that international investors and institutions still regard the country as an attractive market. Much, however, will depend on the government’s ability to maintain policy consistency and deliver key infrastructure and resource projects without further delays.
