Despite rich resources in the form of minerals, forests and fish banks, Papua New Guinea is one of the least developed countries in the South Pacific. Poverty is widespread, and most people practice natural housekeeping. Only a small proportion have paid work. Poor infrastructure, low levels of education, corruption and social unrest are hampering development, and the country is losing out on the global knowledge-based economy. After a significant economic downturn, gross domestic product (GDP) in 2003 was estimated at USD 620 per capita. Agriculture, mining and forestry dominate the economy, which is heavily dependent on commodity prices on the world market. In the 1970s, Australia contributed aid equivalent to 50% of GDP, but it has subsequently fallen sharply. In 2003, the World Bank assumed that over half of the working population was underemployed, and estimated unemployment in cities at 70%. This was given as an explanation for increasing social unrest and crime.
According to countryaah, agriculture (including fishing) accounted for 28% of GDP in 2004 and employed 63% of the economically active population. In addition, there is a large group that feeds only on natural households, and together, over 80% of the population is counted as dependent on agriculture and fishing for subsistence. Yams, bananas and sago are the most common food products in the lowlands, while sweet potatoes dominate in the highlands. Corn, rice, melons, tropical fruits and sugar cane are also grown for their own use. The most productive part of agriculture is found in the highlands. Coffee (65 000 tonnes in 2003) is main selling product for 1/4of the population. Cocoa (42,000 tonnes), coconuts (for the production of copra and copra oil), palm oil, rubber, pineapple, tea, peanuts (peanuts) and spices are also grown for sale. Main animals are pigs and poultry. Many grasslands have fueled a growing cattle ranch.
Logging operated by Malaysian logging companies (from Sarawak) is an important export industry. However, it is estimated that the harvest has been three times above the sustainable level, and the authorities have therefore tried to impose restrictions on the harvest.
The country has some of the best fishing banks in the South Pacific with particularly large stocks of tuna. Sales of fishing rights to foreign shipping companies are an important source of income. Mackerel (tuna) is the main species of fish. Extraction of shark oil was a growth industry in the 1990s, but has since faced criticism for alleged predatory fishing.
The process industry is limited and has accounted for less than 10% of GDP. Essentially, it only covers the processing of agricultural products and various small industries. Several fish canning factories were established during the 1980s and 1990s, but many of them were later closed down. A cement plant was opened in Lae in 1993. An oil refinery is estimated to have opened in Port Moresby in 1998.
In 2003, mining and oil and gas extraction accounted for approx. 30% of GDP. The mineral resources are rich and are mainly extracted by Australian and American companies. The most important metals are gold (65.5 tonnes, 2002) and copper (150 600 tonnes). The gold deposits have been important for European exploration of the area. In modern times, gold is mined in several places. Porgera in the highlands. The extraction is estimated to reach over 100 tonnes per year when extraction commences on Lihir Island, which has the world’s largest known gold deposits outside South Africa. Copper is also mined in several places. One of the world’s largest copper mines can be found at Bougainville. When it was closed during the 1989 civil war, the country lost 40% of its export earnings. The loss was replaced in the 1990s by new mines and by oil recovery. Mining has led to major environmental damage,
Extraction of oil and natural gas takes place on the south coast offshore in the Gulf of Papua, as well as on Lake Kutubu in the highlands. In the 1990s, oil production fluctuated between 100,000 and 150,000 barrels per day, but in 2003 fell to below 50,000 barrels per day. Oil resources are declining rapidly, and known reserves are expected to be depleted by 2012. However, gas reserves are large. A gas pipeline to Queensland in Australia is planned to be built. Papua New Guinea has a huge potential for hydropower, but most of the countryside is without electricity, and cities are often hit by power outages.
Since the turn of the millennium, mineral exports have amounted to approx. 3/4 of the exports and black for 1/4 of GDP. Mineral exports have produced solid foreign trade surpluses, but revenues fluctuate strongly with commodity prices. The country is also one of the world’s largest exporters of untreated tropical timber. In addition to industrial products, imports include food products such as fish products and rice. The main export market is Japan, while Australia is the source of almost half of imports.
Transport and Communications
The rugged landscape prevents the development of a national road network. The best developed road network is in the Lae area and in the eastern highlands. The capital Port Moresby has no road connection with any other major city. The Sepik River is an important transport year in the northwest. The country has no railroad. The lack of road network has made air traffic particularly important for domestic traffic. There are more than 400 airports and airstrips. International Airport at Port Moresby. In 2006, the State Air Niugini had routes to several Australian cities, as well as Singapore, Manila and Tokyo.