Economy - overview:
Papua New Guinea (PNG) is richly endowed with natural resources, but exploitation has been hampered by rugged terrain, land tenure issues, and the high cost of developing infrastructure. The economy has a small formal sector, focused mainly on the export of those natural resources, and an informal sector, employing the majority of the population. Agriculture provides a subsistence livelihood for 85% of the people. The global financial crisis had little impact because of continued foreign demand for PNG's commodities.
Mineral deposits, including copper, gold, and oil, account for nearly two-thirds of export earnings. Natural gas reserves amount to an estimated 155 billion cubic meters. Following construction of a $19 billion liquefied natural gas (LNG) project, PNG LNG, a consortium led by ExxonMobil, began exporting liquefied natural gas to Asian markets in May 2014. The project was delivered on time and only slightly above budget. The success of the project has encouraged other companies to look at similar LNG projects. French supermajor Total is hopes to begin construction on the Papua LNG project by 2020. Due to lower global commodity prices, resource revenues of all types have fallen dramatically. PNG’s government has recently been forced to adjust spending levels downward.
Numerous challenges still face the government of Peter O'NEILL, including providing physical security for foreign investors, regaining investor confidence, restoring integrity to state institutions, promoting economic efficiency by privatizing moribund state institutions, and maintaining good relations with Australia, its former colonial ruler. Other socio-cultural challenges could upend the economy including chronic law and order and land tenure issues. In August, 2017, PNG launched its first-ever national trade policy, PNG Trade Policy 2017-2032. The policy goal is to maximize trade and investment by increasing exports, to reduce imports, and to increase foreign direct investment (FDI).
Definition: This entry briefly describes five economic components for a given country:
* National Economy, including a brief economic history;
* Domestic Markets, including labor and wage markets as well as brief commentary on economic sector portfolios;
* Financial Power and Public Finance, including brief discussions of financial market strengths and security, lending/exchange rates (especially if abnormalities exist), and foreign direct investments;
* Trade Power and Influence, including brief commentary on chief imports and exports; and
* Regional Strategy and Efforts, including key partners, regional economic development efforts, and any underlying economic data integrity concerns.
Source: CIA World Factbook - This page was last updated on Saturday, September 18, 2021
