Two new reports indicate business in Papua New Guinea and Pacific is proving resilient as the region looks to move on from the COVID-19 pandemic. A new economic report from ANZ paints a bullish picture of the future, while Pacific SMEs are predicting increased revenues.

Steamships’ Harbourside South development under construction in Port Moresby. Credit: BAI

In its latest economic report on Papua New Guinea, Papua New Guinea: Green Shoots, bank ANZ says it expects the country’s GDP to increase by ‘2.1% in 2022 before strengthening to 5.6% next year and averaging about 8% per year through to the end of this decade.’

Business investment, it says, is ‘showing signs of turning around from the second half of this year and continuing, on a better path, for another eight to ten years.’

Like the most recent Bank of Papua New Guinea quarterly bulletin, ANZ’s report also warns about inflation.

‘Consumer prices will rise further with greater conversion of higher input costs (raw materials for food, energy and shipping rates) to final retail prices. That said, temporary suspensions of taxes on selected grocery and essential items will provide a partial offset.’

The bank reports PNG’s currency, the kina, has remained stable, however.

Growth industries

The bank is protecting a positive outlook in the coming year for several key industry sectors in PNG, notably agriculture, mining, information and communication technology, and accommodation and food services. In 2023, it expects the outlook to improve more broadly across the economy.

Further in the future, the report is even more positive, thanks to expected new resources projects.

‘We see PNG experiencing exceptionally high GDP growth over the 2028–32 period. In 2028, the first gas from Papua LNG is expected to come online, nearly doubling PNG’s LNG exports to 15 million tonnes. The upstream P’nyang development is also expected to start in 2028, taking over from the completion of Papua LNG.

‘In addition, government finances will be in a much better shape after the PNG LNG debt is retired around 2025-26.’

SMEs’ confidence

Meanwhile, eighty-seven per cent of small and medium-sized Pacific businesses are confident they will survive the COVID-19 crisis, according to a new Pacific Trade Invest report.

The PTI Pacific Business Monitor – Recovery Series aims to provide a quarterly analysis on the impact of COVID-19 on Pacific businesses, based on surveys of SMEs across the region.

According to the survey, 84 per cent of SMEs in the Pacific have faced negative impacts because of the pandemic in the first quarter of this year, with over 74 per cent of businesses reporting a decline in revenue because of COVID-19.

However, the report also found that 47 per cent of businesses are expecting revenue to improve in the second quarter of the year.

According to respondents, the top three challenges facing businesses are increasing costs of products (raw materials), poor cash flow and not knowing how long the COVID crisis will last.

According to the survey, 88 per cent said they needed better cashflow and 86 per cent mentioned the need for financial support and a need to review or update their businesses processes.