Papua New Guinea’s gross domestic product is set to increase by 5.5% in 2013, according to the Asian Development Bank’s latest Pacific Economic Monitor, released last week. This is compared to growth of 9.2% in 2012.

Its latest report on the region suggests the scaling down of the ExxonMobil-led PNG LNG gas project will reduce activity in other sectors, but that LNG exports in late 2014 will boost mineral exports. It predicts GDP growth of 6.4% for 2014.

The bank says public debt is expected to remain at below 35% of GDP, but says the PNG Government must ensure spending does not undermine fiscal buffers that have helped PNG sustain itself through the 2007–2009 global financial crisis.

‘Raising the economy’s resilience will be vital to avoid the boom-bust growth cycles PNG has suffered in the past,’ the report says.

Among the measures its advocates is that of ‘restructuring its debt to reduce how often refinancing is required’.

Timor Leste/Nauru lead Pacific region

The report predicts GDP growth across the Pacific region of 5.2% in 2013, led by  Timor Leste (10%), Nauru (8%), PNG and the Solomon Islands (4%). Fiji is expected to grow by 2%.

‘Regional growth is seen to pick up to 5.5% in 2014, in line with the improved global economic outlook, commencement of PNG’s LNG exports and public infrastructure projects in a number of smaller Pacific islands, and post-cyclone reconstruction efforts,’ says the report.

Energy consumption set to double

Energy consumption in the Pacific may double over the next seven years, according to the report, which predicts power consumption could rise by 10% per annum until 2020.

It says the high number of households without access to electricity will see more demand for petroleum products, but warns meeting this demand could be difficult, because of concerns about supplies and geopolitical conflicts.

While PNG and Timor-Leste export crude oil, they are net importers of refined petroleum products.