Papua New Guinea Economic Update : Turning Growth into Jobs

World Bank

Published

30 Jun 2026

Coverage

Pacific

Papua New Guinea’s economy experienced a period of adjustment, with stronger growth in non-resource sectors; structural constraints, however, continue to limit job creation and improvements in living standards. Exchange rate reforms played a central role by easing long-standing foreign exchange (FX) constraints that had suppressed private sector activity. This rebalancing, however, has come with short-term macroeconomic trade-offs. Growth has translated into early labor market improvements though job creation remains a challenge. These growth and employment dynamics reflect deep structural features of the economy. Against this backdrop, macroeconomic policy is appropriately focused on stabilization, though it operates under challenging conditions. Fiscal consolidation has progressed, with the deficit narrowing and public debt declining, supported in part by strong growth and resource revenues. Monetary policy has been tightened to contain inflation and support the exchange rate adjustment, although its effectiveness is constrained by shallow financial markets and high excess liquidity. At the same time, policy responses to ease cost-of-living pressures, including Goods and Services Tax (GST) exemptions and fuel stabilization measures, highlight the trade-off between protecting household welfare and sustaining near-term economic activity, and maintaining fiscal discipline.