Papua New Guinea Economic Update, February 2022 : Navigating a Fragile Recovery
Reflecting a strong global economic rebound, Papua New Guinea (PNG) reversed its downward economic growth trajectory in 2021. The World Bank estimates that the PNG economy contracted by 3.5 percent in 2020 before returning to positive economic grow...
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| Format: | Working Paper |
| Language: | English |
| Published: |
Washington, DC
2022
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| Online Access: | http://documents.worldbank.org/curated/en/099810003082239069/P177337028a2ea020b60f0230e16386050 http://hdl.handle.net/10986/37141 |
| Summary: | Reflecting a strong global economic
rebound, Papua New Guinea (PNG) reversed its downward
economic growth trajectory in 2021. The World Bank estimates
that the PNG economy contracted by 3.5 percent in 2020
before returning to positive economic growth of 1 percent in
2021. Domestic agricultural production continued unabated
through the pandemic, and the Coronavirus disease 2019
(COVID-19) related mobility restrictions were not as severe
as in some other economies. However, gross domestic product
(GDP) growth has lagged global and regional averages. PNG’s
economic performance in 2021 was constrained by falling gold
and liquefied natural gas (LNG) production that resulted in
a decline in extractive sector output for a second
consecutive year. Despite reversing the trajectory of the
widening fiscal deficit, it remained large at over 7 percent
GDP. Public debt exceeded 50 percent of GDP, and the country
is at high risk of debt distress, according to the latest
World Bank - International Monetary Fund (IMF) debt
sustainability analysis. Despite an accommodative monetary
policy, private sector lending remained flat due to subdued
economic conditions. The current account surplus remained
substantial owing to depressed imports and high commodity
prices. However, due to the large debt repayments of the
extractive sector, shortages of foreign currency remain a
key problem for PNG’s economy. |
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