Language:
English
Pages:
1 Online-Ressource
Series Statement:
Economic Updates and Modeling
Keywords:
Children
;
Economic Growth
;
Education
;
Effective Schools and Teachers
;
Human Capital
;
Knowledge for Development
;
Macroeconomics and Economic Growth
;
Quality Education
;
SDG 4
Abstract:
The economy has recovered to pre-COVID level but remains below its pre-COVID trajectory. The COVID-19 crisis led to an economic contraction in 2020-21 before recovering by 5.2 percent in 2022. The recovery in the extractive sector was driven by significant improvement in international prices of key export commodities, although the shutdown of the Porgera gold mine limited the rebound. Growth is estimated to have slowed down to 2.7 percent in 2023, primarily attributed to reduced global demand and domestic supply constraints stemming from scheduled maintenance in extractive facilities. Growth is projected to accelerate in 2024, mostly due to reopening of the Porgera gold mine. The mine restarted operations in 2024Q1 and is expected to reach its normal levels of production by mid-year. Meanwhile, growth could have been even faster, but brief violence and looting in January 2024 put a toll on the economy. According to the Business Council, the loss to the economy was not only from physical losses of assets and property, but also in forgone business revenue, which could lower tax collections and reduce the appetite to invest. In addition, the dispute between authorities and main fuel importer led to disruptions in fuel provision to businesses and households, further slowing down economic activity. The medium-term growth is expected to settle at 3 percent. There are both upside and downside risks to the outlook. The baseline projection does not account for potential new resource mega-projects, like Papua LNG. Thus, the final investment decision and the initiation of construction present an upside risk to the outlook. Meanwhile, slower-than-expected economic growth could materialize through lower demand for PNG's exports, a more pronounced decline in commodity prices, and the impact of droughts and other climate-related events. Keeping up with the strengthened macroeconomic framework will help mitigate these risks
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