Papua New Guinea’s economic outlook for 2026 is being shaped by a combination of cautious optimism and underlying uncertainty, with forecasts from international institutions, the central bank and private sector economists offering differing perspectives on the year ahead.
Recent assessments point to growth moderating after a stronger 2025, when expansion was driven largely by the resources sector, particularly LNG and mining. Estimates suggest growth could ease to around 3 percent in 2026, reflecting a softer pace of activity and delays in major project timelines.
The Bank of Papua New Guinea has highlighted ongoing uncertainty, pointing to global economic volatility and domestic constraints such as foreign exchange shortages, inflationary pressures and limited investment flows. These factors continue to weigh on business activity, particularly in the non-resource sectors.
At the same time, international and private sector forecasts present a more positive outlook. The International Monetary Fund has indicated that growth will remain supported by the resources sector, while calling for structural reforms to strengthen fiscal resilience and improve the business environment.
Westpac economists have taken a slightly more optimistic view, suggesting growth could reach around 4.6 percent in 2026, contingent on progress in major projects such as Papua LNG. However, the timing of final investment decisions remains a critical variable.
Across all projections, there is broad agreement that the resources sector will continue to underpin economic performance, while diversification remains an ongoing challenge. Infrastructure gaps, access to finance and workforce capacity continue to limit expansion in other sectors.
Business sentiment, however, remains relatively positive, with surveys indicating improved expectations around profitability and investment.
For Australian and Papua New Guinean businesses, the outlook underscores both opportunity and complexity. While the fundamentals remain strong, the pace of growth will depend on policy settings, project execution and the broader global environment.
