Papua New Guinea's non-resource economy has grown at close to boom-era rates since 2022, helped by high commodity prices and a recovery in resource revenue, Stephen Howes, Rubayat Chowdhury and Dorothy Kaupa wrote on the Devpolicy Blog.
Howes is Director of the Development Policy Centre and Professor of Economics at the Crawford School of Public Policy at The Australian National University. Chowdhury is a macroeconomist and research advisor at the centre, and Kaupa is an economics tutor at the University of Papua New Guinea.
Their analysis updates the ANU–UPNG book on PNG's economic history, Struggle, Reform, Boom and Bust, which divides the post-independence years into the early struggles of the seventies and eighties, the reform and crisis of the nineties, the boom of the noughties and the quiet bust of the tens. The book's figures stopped in 2022; data is now available to 2025.
The authors end "the tens" in 2021 and define a new period, the twenties, from 2022 to 2025. Non-resource GDP per person, the book's main measure of performance, fell by an average 1.1 per cent a year from 2014 to 2021 but has grown by 2.3 per cent in the twenties, against 2.8 per cent in the boom years. Population growth of 2.7 per cent is assumed.
GDP per person growth is lower in the twenties than in the tens, they wrote, but because the gains of the enclave resource sector largely flow offshore it is not a good guide to PNG's performance. Formal sector employment, which fell by 1.8 per cent a year in the tens, has grown by 2.6 per cent.
PNG is a commodity economy, and the PNG-specific price index built for the book has risen in the twenties, the authors wrote. It remains below its 2012 peak but is higher than for the noughties as a whole, with energy prices lifted by the Ukraine and then the Iran war, and gold prices at records.
High prices are necessary but not sufficient, they wrote: 90 per cent of PNG's commodity exports come from the resource sector, and revenue only reaches the wider economy through projects that pay tax and dividends to government. Resource revenue has risen to 3.8 per cent of GDP in the twenties, more than triple the 1.2 per cent of the tens, partly because PNG LNG debt has been paid off.
The current government also deserves credit for central banking reforms that have reduced, but not ended, foreign exchange rationing, which businesses named as their main constraint on growth in the 2010s, the authors wrote. The reforms have involved a managed depreciation of the kina against the US dollar of more than 20 per cent over three and a half years.
The main disappointment is employment, they wrote. Reported private sector growth of 2.6 per cent is about the population growth rate and roughly half the 5 per cent of the boom years, with no sign of a pick-up in private investment.
It is too early to put a label on the twenties, the authors wrote. El Niño will dampen agriculture and resource output this year and next, with Porgera and Ok Tedi at risk because both mines need inland water, while a new mega-project could eventually stimulate the economy.