Economy needs projects: Bank

By DALE LUMA
PAPUA New Guinea’s economy will remain challenged in the short term until some resource projects commence, according to the Asian Development Bank (ADB).
ADB PNG country economist Edward Faber said the country currently faced a number of issues such as the impact of the Coronavirus (Covid-19) pandemic, foreign exchange imbalance, and the upcoming national elections next year.
He addressed the EU-PNG business, trade and investment conference in Port Moresby yesterday.
Faber said PNG’s economy in 2020 was about US$23.7 billion (about K81 billion), the mineral sector making up a quarter which helped to drive significant growth in the whole economy.
“In 2020, the growth forecasts had been to be about two per cent pre Covid-19, so that was still seen to be relatively subdued and weak,” Faber said.
“There’s no major investment, no major mega projects generating growth and also a number of impediments including foreign exchange shortages and infrastructure.
“With the Covid-19 pandemic effects, growth was then revised between negative three to four per cent.
“So as we take a closure look at 2020 then, the major sectors to show contraction were accommodation and food services, transport and stage, trade, construction and elsewhere.
“These sectors being specifically impacted by the lockdowns, restriction to movement of people and goods and weaker international demand for Papua New Guine’s exports and difficulties with having imports.”
Faber added that the largest sector to show a decline was the mining sector due to the Porgera mine closure while the Ok Tedi mine suspended operations for about six weeks and the Lihir mine reported weaker production.
Faber said there were, however, bright spots such as the anticipated reopening of the Porgera gold mine and other major projects in the pipeline including fiscal reforms.