Papua New Guinea's economy: exports from mines, a living from gardens

What village gardens grow for most households

Most food in Papua New Guinea never enters a market. Wikipedia's economy article estimates that nearly 40% of the population are subsistence farmers, living largely outside the cash economy, and that the informal economy supports about 85% of people, mainly through their own gardens; the World Bank puts 85% of the population in rural areas. The constitution itself asks for "traditional villages and communities to remain as viable units of Papua New Guinean society".

What is grown depends on height and soil. Britannica describes yams and taro, with bananas, as the staples of the northern islands, sweet potato, known as kau kau, as the staple of the Highlands, and sago as the food of the Ramu and Sepik swamps, with slash-and-burn plots of taro and yam in the forested foothills between. Wikipedia's economy article adds that sweet potato allowed gardens as high as 2,700 metres, that subsistence plots are often a tenth of a hectare or less, cleared, cropped for two years and left fallow for five to fifteen. Pigs and poultry are kept beside them. It estimates that only 30% of the land has a climate and terrain suited to farming.

The World Bank's series tracks how the farm share of the measured economy has fallen as mining and gas grew: farming together with forestry and fishing made up 34.0% of GDP in 2000 and 17.0% in 2024.

How cash crops passed to smallholders

The colonial economy was built on plantations of copra and cacao, and coffee came later. Britannica records that Arabica coffee grown by Highlands families spread quickly from the 1950s and that after 1975 smallholders took over most export crop production from foreign-owned estates. High-quality Arabica still comes mostly from smallholders in the Highlands and Robusta from the north coast, while cacao is an island crop; copra, once the leading lowland crop, is now produced only in small amounts. By the mid-2010s, in Wikipedia's figure, smallholders grew 70% of the country's tree crops.

The exception is oil palm. Britannica describes its growth in West New Britain, on volcanic soils that had been little used, and on the eastern mainland, financed by foreign investment, and Wikipedia's economy article names palm oil as the main agricultural export, with coffee the main export crop of the Highlands. Britannica notes that plantation crops other than palm have mostly stagnated since the 1980s as their terms of trade fell.

Forestry has been a different story. Logs have at times made up a tenth of the value of exports, and Britannica describes an industry dominated by foreign-owned companies with close ties to the political elite, marked by improperly issued licences, mislabelled species, transfer pricing, tax avoidance, environmental damage and little replanting. Wikipedia's economy article cites an estimate that up to 70% of logging may be illegal.

What the mines have earned and cost

From 1970, Britannica writes, mineral discoveries turned an economy dependent on tropical crops into one that earned most of its exports from minerals. The large gold and copper deposits were developed at Panguna on Bougainville, at Ok Tedi in the Star Mountains, which opened in 1982, on Misima Island, at Porgera in Enga Province and on Lihir Island off New Ireland. Misima was worked out and closed in 2005. In the mining boom of the early 21st century mining and quarrying provided about a quarter of GDP in Britannica's account. Gold and copper made up about two-thirds of the value of exports. Wikipedia's economy article puts mineral production at 26.3% of GDP in 1999.

The mines have carried heavy costs. Britannica describes serious environmental damage from mine tailings at several projects and constant disputes between landowner groups and the national government over how revenue is shared. At Panguna those disputes were one cause of the war that closed the mine in 1989; Bougainville once produced, in Wikipedia's history, almost 50% of the country's exports and 20% of national revenue. Since its Mining Act of 2015, Bougainville's own government controls mining there, and the minerals belong to customary landowners.

How gas from the Highlands reaches Asia

Oil and gas took longer. Britannica records 70 years of exploration before the large finds of the late 1980s, oil and gas production near Lake Kutubu and Tari from 1992, and work on a large liquefied natural gas project on the south-western slopes of the main range from 2009.

That project, PNG LNG, is operated by ExxonMobil PNG, which gives its cost as US$19 billion and its start as the middle of 2014. Gas from the Highlands travels through more than 700 kilometres of pipeline, in Wikipedia's figure, to a plant north-west of Port Moresby, where it is liquefied for shipment to customers in Asia. ExxonMobil gives the capacity as more than 8 million tonnes of LNG a year and expects the project to produce more than 11 trillion cubic feet of gas over its life; Wikipedia's economy article gives the liquefaction capacity as 6.9 million tonnes a year. Two new provinces, Hela and Jiwaka, were created in the project area in 2012.

The gas changed the national accounts at once. Real growth was 13.5% in 2014 in the World Bank's series, and the current account, in deficit by 16.2% of GDP in 2013 while the plant was being built, was in surplus by 15.5% of GDP in 2024. It did less for the budget than expected: Wikipedia's history records that falling gas and oil prices left government revenue lower than forecast. Further gas fields and the Wafi-Golpu copper and gold deposit are proposed.

Why so few people hold wage jobs

Formal employment has grown slowly since independence and fell in the 1980s and 1990s. Britannica estimates that formal salaried work employs only about a tenth of the adult workforce, with few women in it, and that basic wages are higher than in much of South-East Asia while productivity is relatively low. Skilled work is concentrated in the capital and the mining areas, and foreign workers fill the gap. Measured unemployment is low, 2.6% in 2025 in the World Bank's series, because so many people work for themselves in gardens and markets.

Manufacturing outside mining is small. Britannica puts it at less than a tenth of GDP, centred on Lae and Port Moresby and on palm oil processing, and the World Bank's series records manufacturing at 1.6% of GDP in 2024. The tax base is narrow too: most tax revenue comes from companies, and a 10% goods and services tax, 60% of which goes back to the province where it was raised, is the main tax most people pay.

Where electricity and phone networks reach

Power is one of the narrowest parts of the economy. Wikipedia's economy article reports that 50.42% of the rural population and 80.23% of the urban population had access to electricity in 2017. PNG Power operates three separate grids: one for the capital, the Ramu grid that runs from the north coast into the Highlands and a small grid on the Gazelle Peninsula of New Britain fed mainly by a run-of-river hydro plant of 10 megawatts. About half of the electricity generated comes from petroleum products and most of the rest from natural gas, with hydropower the main renewable; the Yonki dam on the Ramu, in operation since 1991, has 77 megawatts. Around half of the 797 megawatts produced in 2018 came from private plants, mostly for mines. Britannica records that hydropower supplies Port Moresby, the Highlands, Lae and Madang.

Telephones spread faster than power lines. Until the second half of 2007 the state operator held a monopoly confined largely to the towns; the entry of Digicel that year extended mobile coverage across much of the country, and Wikipedia's economy article puts mobile penetration at 41% by 2014. In the World Bank's series 18.8% of people used the internet in 2024. Fishing, the other large resource, earns less than its size suggests: shrimp is the main fish export, while the tuna in the exclusive economic zone is caught mostly by foreign boats under licence.

How the kina and the budget have fared

The kina replaced the Australian dollar on 19 April 1975, and the travel authority notes that it and its subunit, the toea, take their names from shell money. Britannica records that the kina rose after independence and was heavily devalued in the 1990s, after the Bougainville crisis and poor fiscal control; it was floated in 1994, and the World Bank made an emergency loan in 1995. Wikipedia's economy article describes the kina as now managed through a crawling peg. Britannica adds that the central bank, the Bank of Papua New Guinea, was strengthened in the decade after the devaluations, and that a small stock exchange has traded since the late 1990s, its listings mostly foreign-based mining and oil companies along with financial firms.

Public debt has followed the resource cycle. In the IMF's series general government debt fell to 16.3% of GDP in 2011, rose to 53.9% in 2023 and stood at 52.1% in 2025; the IMF projected 34.4% for 2031. The World Bank's Economic Update of June 2025 reported that the deficit had narrowed to 3.2% of GDP in 2024, and named commodity prices and foreign exchange shortages as risks, with climate change beside them. The IMF's 2025 Article IV report reviewed the country's Extended Fund Facility and Extended Credit Facility programmes and a new Resilience and Sustainability Facility arrangement. Debt sustainability and foreign exchange shortages headed its agenda. Inflation was 4.4% in 2025.

Aid remains part of the picture. The Australian contribution fell from 40% of government revenue in 1975 to 17% in 1988, in Wikipedia's account, and Australia is still the largest aid donor. The World Bank reports 10 active projects with commitments of US$726 million.

Who buys what Papua New Guinea sells

Exports are dominated by gold and copper, with oil and gas beside them. Wikipedia's economy article puts mineral deposits at 72% of export earnings and extractive resources at 86% of exports, and records that their value has generally kept the current account in surplus. Britannica names Australia, Japan and China as the main destinations, and Australia as the source of nearly half of imports in the decades after independence and about a third in the early 21st century; the main imports are machinery and transport equipment, along with refined fuel and food. Wikipedia's economy article ranks the same three countries as trade partners in that order.

The economy is small next to the land it covers. GDP per person was $3,020 in 2025 in the World Bank's series, and the World Bank's own assessment is that modest growth over 40 years has not translated into significant growth in income per person. Tourism has stayed small for the reasons Britannica gives, high costs of flights and rooms and concerns about personal security, which the travel article takes up.