While we’re still waiting for major projects to commence, some key data is suggesting Papua New Guinea’s economy has turned a corner.

‘We expect a very strong second half of the decade when Papua LNG and the gold/copper Wafi-Golpu mine come online, work on the upstream P’nyang fields commence and investments in electrification, telecommunications and renewable energy projects ramp up …

‘In the interim, the economy will get a fillip from government expenditure and elevated national income, boosted by an uplift in commodity prices. Ongoing road works, up and down the country, will support activity; but overall we expect another soft year, with business investment unlikely to rev up until 2023.’

— Papua New Guinea: Green Shoots report (May 2022), ANZ Research

As expected, 2022 has so far been a year of delayed gratification for PNG business. The tranche of major resources projects we have waited for for some years is still ahead of us, while PNG’s National Elections, while giving a short ‘sugar hit’ to the economy, will inevitably mean major decisions are deferred until the next government is formed.

However, as recent data released by PNG’s central bank confirms, the economy has unquestionably rebounded from the tough early days of the COVID-19 pandemic.

With national carrier Air Niugini reporting its traveller numbers are back above 2019 levels and the prices of nearly all PNG’s major commodity exports higher than usual, the signs are encouraging.

ANZ’s positive analysis notes that the commodity windfall, together with infrastructure spending, should keep the economy ticking over until 2023, when we can reasonably expect the Porgera gold mine to be open again under new management and a final investment decision on the TotalEnergies-led Papua LNG project.

Chomping at the bit

Busier international flights are not the only sign business people are chomping at the bit to get going again. This week, we co-hosted (with Austrade and Austmine) an online briefing for businesses looking to supply PNG’s major mining projects. Over 330 people from 15 countries attended.

Our recently-released PNG 100 CEO Survey, produced in partnership with Westpac, also showed signs for optimism from PNG’s largest companies, who are expecting profits, capex and payroll growth this year.

‘Clearly, understanding the changing global geopolitical and economic situation is going to be more essential for PNG businesses than ever’

The survey also reports on the downside of operating in PNG – impediments. The top ones this year were all related to government – regulatory uncertainty, security/law and order, and lack of government capacity.

But for some bureaucratic bottlenecks – the Port Moresby Chamber of Commerce and Industry President Rio Fiocco also recently expressed frustration at the slow progress of streamlining work permit and visa systems – could PNG be bouncing back even faster?

Structural shift

Clearly, understanding the changing global geopolitical and economic situation is going to be more essential for PNG businesses than ever as we navigate our way our of the COVID-19 pandemic.

For example, as ANZ’s Green Shoots report notes, the war in Ukraine is ‘causing a structural shift in the energy complex, particularly for LNG’ – PNG’s most valuable export.

This is a key reason we’ve invited renowned economist and business commentator Saul Eslake back to present the keynote address to this year’s Business Advantage Papua New Guinea Investment Conference, set for 15 and 16 August at Brisbane’s Convention and Exhibition Centre.

Saul’s presentation to our virtual conference last year was memorable for its clarity and insights, as you might expect from a former Chief Economist at ANZ. His presentation this year is likely to be even more essential.

Registrations for the conference open next month but you can register your interest in attending here, or email events@businessadvantageinternational.com if your business would like to get participate in the Conference Expo.