Papua New Guinea Economic Update, January 2019 : Slower Growth, Better Prospects
The PNG economy has become increasingly concentrated in petroleum-and-gas-related activities since 2014, raising its vulnerability to external shocks, including commodity-price shocks and natural disasters. In recent months, however, the authoritie...
| Main Author: | |
|---|---|
| Format: | Report |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/597161549016416469/Papua-New-Guinea-Economic-Update-Slower-Growth-Better-Prospects http://hdl.handle.net/10986/31245 |
| id |
okr-10986-31245 |
|---|---|
| recordtype |
oai_dc |
| spelling |
okr-10986-312452021-05-25T09:21:33Z Papua New Guinea Economic Update, January 2019 : Slower Growth, Better Prospects World Bank Group ECONOMIC GROWTH ECONOMIC OUTLOOK RISKS FISCAL TRENDS MONETARY POLICY TRADE PRIVATE SECTOR DEVELOPMENT JOB CREATION BUSINESS ENVIRONMENT INCLUSIVE GROWTH SHARED PROSPERITY The PNG economy has become increasingly concentrated in petroleum-and-gas-related activities since 2014, raising its vulnerability to external shocks, including commodity-price shocks and natural disasters. In recent months, however, the authorities have taken decisive action to promote greater diversification of the economy. Ongoing reforms to strengthen the monetary and exchange rate policy and framework are expected to improve business confidence and increase private investment and growth in the non-resource economy. Measures include addressing the FX shortage, managing the liquidity effects of the use of FX to clear the FX orders backlog, working on greater exchange rate flexibility, considering options for strengthening the interest-rate transmission mechanism, and enhancing modeling capacity in the Bank of Papua New Guinea (BPNG). In this context, the government and the BPNG will need to ensure regular, transparent, and consistent communication with all stakeholders to minimize the risk of confusion and market disruption. Papua New Guinea’s medium-term economic outlook is relatively sanguine, underpinned by further large-scale resource projects. Real GDP growth is forecast to rebound to about 5 percent in 2019, primarily driven by a return to full annual production in the extractive sector. In the years after, growth is estimated to ease to its current potential of 3-4 percent a year, until planned investments in LNG and mining projects kick in. Future large-scale investment in the resource sector appears likely, with plans to double LNG production and develop new gold, copper, and silver reserves. With increased FX inflows into the economy, the current pressure on the exchange rate may reverse, adversely affecting the competitiveness of the non-resource economy. To facilitate broad-based, inclusive, and sustainable development, the government will need to focus more on investing in human capital and strengthening the business environment to spur private sector development, as elaborated in the World Bank’s Systematic Country Diagnostic and summarized in the special focus section of this report. 2019-02-08T18:04:18Z 2019-02-08T18:04:18Z 2019-01-31 Report http://documents.worldbank.org/curated/en/597161549016416469/Papua-New-Guinea-Economic-Update-Slower-Growth-Better-Prospects http://hdl.handle.net/10986/31245 English CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Economic & Sector Work :: Economic Updates and Modeling Economic & Sector Work East Asia and Pacific Papua New Guinea |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ECONOMIC GROWTH ECONOMIC OUTLOOK RISKS FISCAL TRENDS MONETARY POLICY TRADE PRIVATE SECTOR DEVELOPMENT JOB CREATION BUSINESS ENVIRONMENT INCLUSIVE GROWTH SHARED PROSPERITY |
| spellingShingle |
ECONOMIC GROWTH ECONOMIC OUTLOOK RISKS FISCAL TRENDS MONETARY POLICY TRADE PRIVATE SECTOR DEVELOPMENT JOB CREATION BUSINESS ENVIRONMENT INCLUSIVE GROWTH SHARED PROSPERITY World Bank Group Papua New Guinea Economic Update, January 2019 : Slower Growth, Better Prospects |
| geographic_facet |
East Asia and Pacific Papua New Guinea |
| description |
The PNG economy has become increasingly
concentrated in petroleum-and-gas-related activities since
2014, raising its vulnerability to external shocks,
including commodity-price shocks and natural disasters. In
recent months, however, the authorities have taken decisive
action to promote greater diversification of the economy.
Ongoing reforms to strengthen the monetary and exchange rate
policy and framework are expected to improve business
confidence and increase private investment and growth in the
non-resource economy. Measures include addressing the FX
shortage, managing the liquidity effects of the use of FX to
clear the FX orders backlog, working on greater exchange
rate flexibility, considering options for strengthening the
interest-rate transmission mechanism, and enhancing modeling
capacity in the Bank of Papua New Guinea (BPNG). In this
context, the government and the BPNG will need to ensure
regular, transparent, and consistent communication with all
stakeholders to minimize the risk of confusion and market
disruption. Papua New Guinea’s medium-term economic outlook
is relatively sanguine, underpinned by further large-scale
resource projects. Real GDP growth is forecast to rebound to
about 5 percent in 2019, primarily driven by a return to
full annual production in the extractive sector. In the
years after, growth is estimated to ease to its current
potential of 3-4 percent a year, until planned investments
in LNG and mining projects kick in. Future large-scale
investment in the resource sector appears likely, with plans
to double LNG production and develop new gold, copper, and
silver reserves. With increased FX inflows into the economy,
the current pressure on the exchange rate may reverse,
adversely affecting the competitiveness of the non-resource
economy. To facilitate broad-based, inclusive, and
sustainable development, the government will need to focus
more on investing in human capital and strengthening the
business environment to spur private sector development, as
elaborated in the World Bank’s Systematic Country Diagnostic
and summarized in the special focus section of this report. |
| format |
Report |
| author |
World Bank Group |
| author_facet |
World Bank Group |
| author_sort |
World Bank Group |
| title |
Papua New Guinea Economic Update, January 2019 : Slower Growth, Better Prospects |
| title_short |
Papua New Guinea Economic Update, January 2019 : Slower Growth, Better Prospects |
| title_full |
Papua New Guinea Economic Update, January 2019 : Slower Growth, Better Prospects |
| title_fullStr |
Papua New Guinea Economic Update, January 2019 : Slower Growth, Better Prospects |
| title_full_unstemmed |
Papua New Guinea Economic Update, January 2019 : Slower Growth, Better Prospects |
| title_sort |
papua new guinea economic update, january 2019 : slower growth, better prospects |
| publisher |
World Bank, Washington, DC |
| publishDate |
2019 |
| url |
http://documents.worldbank.org/curated/en/597161549016416469/Papua-New-Guinea-Economic-Update-Slower-Growth-Better-Prospects http://hdl.handle.net/10986/31245 |
| _version_ |
1764473878728409088 |