Papua New Guinea's economy is set to weaken

Subject

The economic outlook for Papua New Guinea.

Significance

The outlook for the leading commodity exports from Papua New Guinea (PNG) -- natural gas, oil and gold -- remains positive, but by most counts the economy is deteriorating and will worsen as Asia’s aggregate demand for resource commodities falls.

Impacts

• The new government may pass legislation to obtain higher returns to PNG from foreign investment.
• Perceived corruption and declining governance will directly damage investor confidence.
• As financial and economic pressures mount, there may well be changes in macroeconomic policy.