PNG's GDP Growth Averages 1.5% Due to Economic Challenges, Says Official
In a recent statement, Said Zaidansyah, the country director of the Asian Development Bank, shed light on Papua New Guinea's economic landscape, revealing that the gross domestic product (GDP) growth between 2019 and 2023 stagnated at an average of 1.5%. Zaidansyah attributed this sluggish growth to several key factors, underscoring the need for strategic reforms to unlock the nation's growth potential.
PNG's status as a resource-dependent lower-middle-income country has contributed to its economic challenges, with the GDP growth averaging a modest 1.5% over the specified period. Zaidansyah highlighted the following impediments hindering economic progress:
- Global Shocks: The onslaught of global shocks, including the COVID-19 pandemic, has dealt a blow to PNG's economic resilience.
- Non-Diversified Economy: The over-reliance on the natural resources extractive sector has left PNG vulnerable to fluctuations in global commodity markets.
- Structural Impediments: Persistent infrastructure gaps, a volatile law and order environment marked by internal unrest and violence, and complexities surrounding land access for investment have hampered economic development.
- Macroeconomic Management Weaknesses: Inadequate management of boom-bust cycles has led to persistent exchange rate overvaluation and restrictions on foreign currency access since 2015.
Despite these challenges, Zaidansyah expressed optimism about PNG's potential for positive and sustainable inclusive growth. He emphasized the importance of diversifying the economy beyond resource extraction, highlighting agriculture, fisheries, and tourism as potential growth drivers.
Zaidansyah noted that the resumption of full production at the Porgera gold mine could bolster growth in 2024 and 2025. However, he cautioned that events such as the civil unrest on January 10 and a challenging business environment could impact economic predictions.
Urgent reforms, particularly in the energy sector, such as tariff adjustments, were identified as crucial steps to improve PNG's economic prospects. Addressing these development challenges, Zaidansyah concluded, is essential to unlocking PNG's vast growth potential and fostering a prosperous future for its citizens.
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