Following the quake-affected economic contraction in 2018, real GDP grew at more than 4% in 2019 on the back of increasing production of LNG, gold and copper. But the outlook remains challenged, and growth will likely remain at around 2% in 2020 and 2021 according to IMF forecasts. Slow implementation of resource projects, including Papua LNG and Wafi-Golpu has delayed PNG’s economic recovery. Although proceeds from external concessional loans has increased foreign exchange availability, ongoing foreign currency shortages will continue to hinder domestic confidence and investment in the sluggish non-mining sector. Government belt-tightening will continue to weigh on public sector investment.
In the next few years and beyond, the development of LNG and mining projects bolsters growth prospects. However, stronger productivity and new growth opportunities outside the resources sector requires significant improvements in governance and economic and social infrastructure. Risks to growth stem from weaker global demand weighing more significantly on commodity prices and even slower-than-expected implementation of investment projects in PNG's extractive industries. PNG is also exposed to environmental risks, as evidenced in recent years.