Asian Development Bank economy forecast for PNG

Prices of basic food items on store shelves continue to rise despite "subdued inflationary pressures".

This month Asian Development Bank [ADB] report states that "subdued inflationary pressures in H1 [first half] 2024 bring down the inflation forecast from ADB [April 2024 Outlook], although prices of key consumer items continue to rise.

ADB September 2024 Outlook made forecast adjustments based on the National Statistical Office report of "decline in the prices of alcoholic beverages, tobacco and betelnut, household equipment, and communications, which led to prices contracting by 2.1% in quarter-one 2024 and by 0.7% in quarter-two 2024 [but] the prices of key consumer items continue to increase, however, the increase was not as high as a year ago.

"Prices up by 5% or more included food and non-alcoholic beverages, household equipment, clothing and health care."

ADB inflation forecast for PNG in 2024 is 4.5% compared to 5% by the Bank of Papua New Guinea.

Meanwhile, the ADB Report readjusted its April 2024 forecast of the country's gross domestic product [GDP] because of "low resource extraction" in the first half of 2024.

"Production of liquefied natural gas [LNG], gold and nickel were lower than expected. Maintenance at the LNG central processing facility and low supply from a matured gas field slowed LNG Production, while bad weather reduced gold production, particularly at the Lihir Mine, with maintenance work affecting nickel output.

"The non-resource sector is on track with April expectations, supported by spillover effects from the resumption of the Porgera Mine, improved Foreign Exchange [FX] inflows and a cocoa price increase contributed to higher FX allocation, thereby lowering the backlog of outstanding FX orders at the end of Q2 [quarter-two] 2024."

ADB forecasted a 3.3% GDP growth for PNG this year and 4.6% in 2025.