Papua New Guinea Economy, GDP, Budget, Industry and Agriculture


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Papua New Guinea Economy

View the information below regarding the economy of Papua New Guinea. The summary and statistics contains gdp, industry, agriculture and more for Papua New Guinea. If you need other information please visit the Papua New Guinea Country Page.

  • Papua New Guinea Government
  • Papua New Guinea People
  • Papua New Guinea Geography
  • Papua New Guinea History

    Economy (2001 est., U.S.$)
    GDP: $1.2 billion.
    Growth rate: minus 3.3%.
    Per capita GDP: $580. Natural resources: Gold, copper ore, oil, natural gas, timber, fish.
    Agriculture (26% of GDP): Major products--coffee, cocoa, coconuts, palm oil, timber, tea.
    Industry (42% of GDP): Major sectors--copra crushing; palm oil processing; plywood production; wood chip production; mining of gold, silver, and copper; construction; tourism; crude oil production.
    Trade (2001): Exports--47.5% of GDP: gold, copper ore, oil, timber, palm oil, coffee. Major markets--Australia, Japan, Germany, U.K., South Korea, China. Imports--46.1% of GDP: machinery and transport equipment, manufactured goods, food, fuels, chemicals. Major suppliers--Australia, Singapore, Japan, U.S., New Zealand, Malaysia.

    Economy of Papua New Guinea
    Papua New Guinea is rich in natural resources, including minerals, timber, and fish, and produces a variety of commercial agricultural products. The economy generally can be separated into subsistence and market sectors, although the distinction is blurred by smallholder cash cropping of coffee, cocoa, and copra. About 75% of the country's population relies primarily on the subsistence economy. The minerals, timber, and fish sectors are dominated by foreign investors. Manufacturing is limited, and the formal labor sector consequently also is limited.

    Mineral Resources
    In 2001 mineral production accounted for 25% of GDP. Government revenues and foreign exchange earning depend heavily on mineral exports. Indigenous landowners in areas affected by minerals projects also receive royalties from those operations. Papua New Guinea is richly endowed with gold, copper, oil, natural gas, and other minerals. Copper and gold mines are currently in production at Progera, Ok Tedi, Misima, and Lihir. New nickel, copper, and gold projects have been identified and are awaiting a rise in commodity prices and a more favorable tax regime to begin development. A consortium led by Chevron is producing and exporting oil from the Southern Highlands Province of Papua New Guinea. In 2006, a consortium led by Mobil/Exxon hopes to begin the commercialization of the country's estimated 22.5 trillion cubic feet of natural gas reserves through the construction of a gas pipeline from Papua New Guinea to Queensland, Australia.

    Agriculture, Timber, and Fish
    Papua New Guinea also produces and exports valuable agricultural, timber, and fish products. Agriculture currently accounts for 30.4% of GDP and supports more than 85% of the population. Cash crops ranked by value are coffee, oil, cocoa, copra, tea, rubber, and sugar. The timber industry was not active in 1998, due to low world prices, but rebounded in 1999. Although a moratorium on logging is currently in place, logging continues at an unsustainable rate. About 40% of the country is covered with exploitable trees, and a domestic woodworking industry has been slow to develop. Fish exports are confined primarily to shrimp. Fishing boats of other nations catch tuna in Papua New Guinea waters under license.

    In general, the Papua New Guinea economy is highly dependent on imports for manufactured goods. Its industrial sector--exclusive of mining--accounts for only 9% of GDP and contributes little to exports. Small-scale industries produce beer, soap, concrete products, clothing, paper products, matches, ice cream, canned meat, fruit juices, furniture, plywood, and paint. The small domestic market, relatively high wages, and high transport costs are constraints to industrial development.

    Trade and Investment
    Australia, Singapore, and Japan are the principal exporters to Papua New Guinea. Petroleum and mining machinery and aircraft are perennially the strongest U.S. exports to Papua New Guinea. Since 1999, as mineral exploration and new minerals investments have declined, so have U.S. exports.

    Australia is Papua New Guinea's most important export market, followed by Japan and the European Union. Crude oil is the largest U.S. import from Papua New Guinea, followed by gold, cocoa, coffee, and copper ore.

    U.S. and Australian companies are active in developing Papua New Guinea's mining and petroleum sectors. Chevron operates the Kutubu and Gobe oil projects and is developing its natural gas reserves. A 30,000-40,000 barrel-per-day oil refinery project in which there is an American interest also is under development in Port Moresby.

    Papua New Guinea became a participating economy in the Asia-Pacific Economic Cooperation (APEC) Forum in 1993. It joined the World Trade Organization (WTO) in 1996.

    Development Programs and Aid
    Australia is the largest bilateral aid donor to Papua New Guinea, offering about $180 million a year in assistance. Budgetary support, which has been provided in decreasing amounts since independence, was phased out in 2000, with aid concentrated on project development. (Per capita aid in 2000 was about $54.) Other major sources of aid to Papua New Guinea are Japan, the European Union, the People's Republic of China, the Republic of China, the United Nations, the Asian Development Bank, the International Monetary Fund, and the World Bank. Volunteers from a number of countries and mission church workers also provide education, health, and development assistance throughout the country.

    Current Economic Conditions
    By mid-2002 Papua New Guinea’s economy was in crisis. Unbudgeted pre-election spending blew out the projected government deficit to about 8% of GDP, though a new government has set a target of 3.4% for the year. Serious problems of corruption, a lack of law and order, land tenure, political interference in businesses, and a lack of will to adapt meaningful structural reforms have compounded poor fiscal results and caused the PNG economy to shrink substantially in recent years. GDP has declined (in current U.S. dollars) from $4.9 billion in 1997 to $3 billion in 2001. Mining output and oil production have led the slide, and with no exploration or capital spending occurring in these sectors the related export earnings are expected to continue to fall, eroding foreign currency reserves and the balance of trade. Papua New Guinea’s currency, the Kina, has been eroding in value and the pressure on it continues, with capital flight and frustrated development partners (and subsequently reduced aid flows) exacerbating a declining situation. If the government continues to delay necessary reforms, more damage and loss to the economy will occur.


  • Papua New Guinea Government
  • Papua New Guinea People
  • Papua New Guinea Geography
  • Papua New Guinea History