Papua New Guinea’s economy is forecast to grow by 3.6 per cent this year and 3.4 per cent in 2027, with the Asian Development Bank preparing a US$1.2 billion investment pipeline for the country over the next three years.
ADB Country Director for Papua New Guinea Takafumi Kadono announced the forecast while presenting the bank’s investment pipeline at the Business Advantage PNG Investment Conference in Brisbane this week.
Mr. Kadono said PNG’s economy recorded 4.7 per cent growth in 2025, supported by both resource and non-resource sectors, while inflation increased to 4.4 per cent.
He said the 2026 and 2027 forecasts did not take into account the potential impact of major projects such as Papua LNG.
“If FID is reached at the end of this year and activities start next year, GDP growth may show an uptick of several percentage points,” Kadono said.
FID refers to the final investment decision that would allow the Papua LNG project to move towards construction.
Mr. Kadono said continuing macroeconomic reforms were improving business confidence and could support stronger growth in the non-resource sector.
However, he said uncertainty remained over the duration of the Middle East conflict and its potential impact on the global economy.
PNG’s dependence on extractive industries, which account for about a quarter of the economy, had contributed to boom-and-bust economic cycles, he said.
Despite the country’s significant natural resources and relatively high gross national income per person, PNG continued to face challenges in human development, poverty reduction, roads and electricity access.
Kadono said resource revenues needed to be converted into infrastructure, better public services and improved living standards.
US$1.2 BILLION INVESTMENT PIPELINE
ADB plans to deliver about US$1.2 billion in new projects in PNG over the next three years, covering transport, energy, water, health, education, agriculture, public-sector management and financial services.
The bank currently has an active PNG portfolio of about US$1.5 billion, with 60 per cent invested in transport, mainly roads and civil aviation, and about 25 per cent in energy.
“Going forward in the next three years, we have around US$1.2 billion worth of new projects coming up,” Kadono said.
The pipeline includes projects covering energy, health, public-sector management, secondary education, civil aviation, financial access, roads and fresh food marketing.
AGRICULTURE AND JOBS
ADB is returning to the agriculture sector through a fresh food marketing programme aimed at strengthening agricultural value chains, connecting farmers to markets and reducing post-harvest losses.
Kadono said the programme would also help rural families generate more income from their produce.
He said agriculture would be important to the Government’s goal of creating one million jobs because most Papua New Guineans were involved in farming in some form.
“Many of them will generate income through their agricultural activities, and we want to help with that,” he said.
ADB also plans to support PNG’s secondary education sector to address a gap between existing support for primary education and technical and vocational education and training.
ROADS AND TRANSPORT
ADB is continuing support for the 430-kilometre Highlands Highway corridor from the Nadzab Airport junction to Kagamuga Airport junction in Mt Hagen, including the upgrading and replacement of 71 bridges.
The bank is also examining further road investments along the Highlands Highway and improvements that could eventually contribute to an all-weather sealed road connection between Port Moresby and Lae.
Further transport links towards the Indonesian border and possible support for Vanimo Port are also being considered.
Kadono stressed that maintaining infrastructure was as important as building it.
“It is not just about building, but maintaining it,” he said.
AVIATION AND ENERGY
ADB has completed the first phase of its Civil Aviation Development Investment Programme, is implementing the second phase and preparing a third.
The programme supports upgrades to national airports, including airside and landside infrastructure and air-navigation services.
ADB and Air Niugini signed a US$35.8 million financing package in December 2025 to support the purchase of six Airbus A220-100 aircraft.
Kadono said airport runways would need to be upgraded and extended where necessary to allow the new aircraft to operate safely with full loads.
In the energy sector, ADB is supporting PNG Power to strengthen transmission and distribution systems, rehabilitate hydropower facilities and expand solar power and battery-energy storage.
The bank is also assisting PNG Power with its power-system master plan and financial-recovery programme.
WATER, HEALTH AND SKILLS
ADB is working with Water PNG to improve water supply and sanitation services in Port Moresby and Vanimo.
It is also supporting the construction and upgrading of health facilities and 10 technical and vocational education institutions.
Training is focused on manufacturing, construction and agriculture, with health-related training also being considered to help address shortages in the health workforce.
PRIVATE SECTOR TO GET FINANCING
Kadono said ADB’s support extended beyond government infrastructure projects and included direct loans, equity investments and credit-enhancement products for private businesses.
ADB has previously invested US$10 million in Kina Securities and US$25 million in Vodafone PNG through ATH Holdings.
Through its ADB Wayfinder programme, the bank is considering smaller private-sector investments of less than US$10 million in the Pacific.
Its ADB Frontier facility provides revenue-based financing, allowing businesses, particularly seasonal agricultural enterprises, to make repayments according to their revenue cycles.
ADB is also assisting PNG to operationalize its public-private partnership centre to attract private capital, technology, technical expertise and management skills into infrastructure and public services.
“We now have all the instruments to cater to all types of requests and financing needs—public sector and private sector,” Kadono said.
ADB has provided approximately US$5.4 billion in loans, grants and technical assistance to PNG, with average annual lending of about US$380 million between 2021 and 2025.