Economy set for rebound with strong mineral sector performance

May 5, 2024 | Blog, News

The Bank of Papua New Guinea (BPNG) anticipates a rebound in the country’s real GDP growth in 2024, led by robust performance in the mineral sector, according to Central Bank Governor Elizabeth Genia. The March 2024 Monetary Policy Statement revealed that a projected 3.0 per cent GDP growth will be driven by the resumed operations at the Porgera mine and increased output in gold, copper, and silver.

Governor Genia highlighted the broader positive impacts expected from new operations at New Porgera and increased government spending, which will also bolster the non-mineral sector. However, the business environment remains challenging, influenced by a downturn in business confidence as reported in the February 2024 Business Sentiment Survey. This downturn is largely attributed to the aftermath of civil unrest in January, which continues to pressure revenue and employment in the non-mineral private sectors.

The central bank’s review noted a substantial decrease in real GDP growth to 1.4 percent in 2023, down from 5.2 percent in 2022, affected by ongoing challenges such as foreign currency shortages and unreliable power supplies. Despite these hurdles, the economic outlook for 2025 looks promising with a projected 4.5 percent growth, attributed to full-year production at New Porgera and a revitalised mineral sector.

Further, the Bank forecasts a 3.6 per cent GDP growth for 2026, supported by heightened mineral sector activity and beneficial outcomes from increased exploration and capital investments. The global economic climate also factors into these projections, with the International Monetary Fund predicting a slight dip in global GDP growth in 2023, influenced by tightening monetary policies and geopolitical tensions.

Inflation concerns are also on the radar for Papua New Guinea, with an expected rise due to the depreciation of the Kina against the US Dollar, prompting BPNG to introduce liquidity management instruments and consider tightening its monetary policy to manage inflationary pressures.

BPNG remains committed to collaborating with the government and international partners to navigate these challenges, aiming to stabilize and grow the Papua New Guinea economy sustainably. Governor Genia remains optimistic about overcoming these obstacles through strategic policy measures and continued international cooperation.

Governor Genia will be addressing the 39th Australia Papua New Guinea Business Forum 13-15 May on the Gold Coast.