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Country Report Papua New Guinea September 2017

Country Report Papua New Guinea September 2017

  • September 2017
  • ID: 2557442
  • Format: PDF
  • By The Economist Intelligence Unit


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Outlook for 2017-21

  • The People's National Congress (PNC) became the main party in the governing coalition following the mid-2017 general election. Given the fluidity of the political scene, further changes to the coalition are likely in 2017-21.
  • The new government faces a more challenging policy environment, as economic conditions will be weaker than during its previous term in office, increasing the potential for social unrest in 2017-21.
  • Political and economic ties with Australia will remain strong. The government will also seek to deepen relations with China over 2017-21.
  • Tax concessions granted to mining companies and high levels of sovereign debt will weigh on the public finances. We forecast a budget deficit equivalent to 4.7% of GDP on average in 2017-21.
  • Real GDP growth will slow to 2.9% a year on average in 2017-21, from an estimated 5.9% over 2012-16, as the substantial increases in liquefied natural gas (LNG) export volumes that drove economic expansion in 2014-15 level off.
  • After inflationary pressures picked up in 2017, The Economist Intelligence Unit forecasts that they will moderate in 2018 and beyond, owing to weaker global and domestic economic growth.
  • Broadly stable LNG prices and weak domestic demand will see the current account remain in surplus in 2017-21. However, we expect the surplus to decline gradually over the forecast period.


  • The leader of the Pangu Party, Sam Basil, and 11 other members of the party announced on September 11th that they had decided to leave the opposition and join the governing coalition led by the People's National Congress.
  • On August 25th the treasurer and deputy prime minister, Charles Abel, unveiled a 100-day Economic Plan aimed at improving the country's economic growth prospects and narrowing the fiscal deficit.

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