PNG economy delicately recovering, report finds

THE country, according to the World Bank, is going through a fragile recovery process with the extractive sector projected to be the main driver of gross domestic product (GDP) at 4 per cent.
The bank’s Asia and Pacific economic report released yesterday found that “uncertainty remains high”.
The extractive sector is projected to rebound, driven by the planned reopening of the Porgera gold mine.
The report adds that high commodity prices will amplify this effect, supporting the external accounts and providing (potentially) higher dividends to State-owned companies which hold shares in resource sector projects.
It said the Omicron variant of the Coronavirus (Covid-19) had been spreading fast in PNG, the least vaccinated country in the East Asia Pacific region.
Less than 6 per cent of the adult population received at least one vaccine dose, with 4 per cent fully vaccinated.
“There is little prospect of a rapid increase in vaccination rates, given high rates of vaccine hesitancy,” it said.
“Combined with the low capacity of the public health system, this poses a risk of higher casualties and a negative impact on domestic economic activity.”
It said that after the recent widening of fiscal deficits, the Government was expected to implement a gradual fiscal consolidation.
“The fiscal space for a significant policy response in case of an economic shock is limited,” it said.
“The repercussions of the Russia–Ukraine war might imply short-term gains from higher commodity prices.
“But the medium-term growth impact is likely to be negative due to higher global uncertainty and lower growth.”