Greater optimism for growth in ’24

By PETER ESILA
WHILE Papua New Guinea’s economic growth was only about half of what was forecast for last year, there is more optimism in 2024 with multi-billion projects coming online, starting with the Porgera gold and copper mine, an economist says.
Institute of National Affairs (INA) executive director Paul Barker said the Porgera operation should be restored in the first quarter of this year, assuming the resolution of some landowner concerns in adjoining Hela province.
“If Porgera, and at least one other major project do successfully proceed in 2024, it should encourage associated investment in other sectors, including the real estate and services industries,” he said.
“And we are already seeing additional international hospitality chains opening up in Port Moresby, such as Marriotts.”
He said the prospective financing and early construction phase for at least one major further resource project (Papua LNG) and possibly a second (Wafi-Golpu copper/gold) starting later this year, and a succession of subsequent projects, “provide more optimistic grounds for sustained economic growth going forward for the next few years”.
“However, as gas-LNG production and even the highly automated Wafi-Golpu project are hi-tech industries, which provide limited employment or local multiplier effects, the participating companies are strongly aware of the need for associated investment in agriculture, afforestation and other initiatives that fulfill their corporate social mandate by generating local community benefits and participation.”
Barker said inflation was restrained in 2023, partly by the weakening of the Australian Dollar to the Kina, with much of Papua New Guinea’s imports sourced from Australia.
“Imported inflationary pressure may reduce in 2024 as the US dollar weakens somewhat, but that may not be the case if current trade disruption pushes up energy and other product prices worldwide and as the Australian dollar likely strengthens against the Kina, and the latter shifts towards its market level,” he said.
“The shortages of foreign exchange are unlikely to ease until Porgera is back producing (although saddled again with further debt), and a further major project investment proceeds, and/or it stabilises at its market level.”
He added that the global economy remained in an uncertain state, with the ongoing Ukraine war and the “seemingly escalating conflicts or series of linked conflicts in the Middle East further disrupting global trade routes”.