Papua New Guinea Country Risk Report 2020

Papua New Guinea Country Risk Report 2020

We at Fitch Solutions forecast real GDP growth in Papua New Guinea to slow to 3.3% in 2020, down from a revised estimate of 4.5% in 2019, as a recent impetus from base effects fade and delays continue to hold up progress on developing new major resource projects.

Over the longer term, our growth outlook is more sanguine as the country leverages off of its rich endowment of natural resources and favourable demographic profile. In particular, we expect the country to experience strong growth from the development of its significant natural gas reserves, with a major boost in exports expected during the second half of the decade.

Talks on the status of the autonomous region of Bougainville following an overwhelming referendum vote for independence will be key to stability and security in the country. The central PNG government will be reluctant to support independence for the region, but failing to honour the referendum could pose downside risks to social stability, and in a worst-case scenario could lead to a new conflict.

Key Risks



We note some downside risks to our outlook from lingering political uncertainty – particularly surrounding the Bougainville independence movement – and emerging fiscal headwinds.

The economy remains heavily dependent on the development of major resource projects, meaning further delays to Final Investment Decisions (FIDs) or a shock to global commodity prices would severely undermine the long-term growth outlook.


Executive Summary
Core Views
Key Risks
Country Risk Summary
Economic Risk Index
Political Risk Index
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Economic Outlook
Economic Growth Outlook
Growth Slowdown In PNG Likely To Be Temporary
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
Outlook On External Position
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
Monetary Policy Framework
TABLE: MONETARY POLICY FORECASTS
Structural Fiscal Position
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
Long-Term Economic Outlook
Robust Long-Term Growth Hinges On Successful Commercialisation Of Resource Wealth
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Political Outlook
Domestic Politics
Increased Uncertainty In PNG After Bougainville Votes For Independence
Long-Term Political Outlook
Bougainville, Corruption And Institutional Weakness Make For Challenging Political Outlook
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings’ Credit Rating. Any comments or data included in the report are solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings’ analysts do not share data or information with Fitch Solutions Macro Research.ContentsDemographic Outlook
TABLE: POPULATION BY AGE GROUP
TABLE: POPULATION BY AGE GROUP %
TABLE: POPULATION HEADLINE INDICATORS
TABLE: KEY POPULATION RATIOS
TABLE: URBAN/RURAL POPULATION & LIFE EXPECTANCY
Global Macro Outlook
Growth Stabilising, With EMs Set To Accelerate In 2020
TABLE: GLOBAL MACROECONOMIC FORECASTS (2018-2023)
TABLE: DEVELOPED MARKETS – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
Index Tables
TABLE: PAPUA NEW GUINEA – MACROECONOMIC DATA & FORECASTS

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