PAPUA New Guinea is forecast to return to positive growth in 2021, according to a new report by the Asian Development Bank (ADB) released today.
But the outlook remains subject to significant risks such as Covid-19 pandemic face in the country as well as other smaller pacific economies.
Papua New Guinea (PNG), the biggest economy in the Pacific, is expected to grow moderately at 2.5% in 2021 as it recovers from a pandemic-induced recession in 2020. However, a recent surge in COVID-19 cases threatens prospects for economic recovery. Development partners are assisting with budgetary support and the delivery of COVID-19 vaccinations. Economic growth in PNG is projected to accelerate to 3% in 2022.
The Pacific is expected to recover after a crippling downturn in 2020. After the subregion’s economy contracted by 5.8% due to the impact of COVID-19, moderate growth of 1.4% is forecast for 2021 and 3.8% for 2022. This mirrors the outlook for Papua New Guinea, the subregion’s largest economy, where output will grow moderately this year, then climb further next year as the recovery strengthens.
Inflation in the Pacific is forecast at 3.7% in 2021, well above the average for developing Asia. This is due mainly to Papua New Guinea, where the depreciation of the local currency and quantitative easing are stoking inflation pressures. Inflation is expected to remain high in the country.
