The World Bank’s Papua New Guinea (PNG) Economic Update offers a comprehensive evaluation of the country’s economy, highlighting the challenges and opportunities for sustainable growth, macro-fiscal stability, and development in the face of global trade and policy uncertainties (Part One). In its special focus (Part Two), the report delves into the agriculture sector in PNG, exploring its potential to enhance livelihoods and serve as a way of diversifying growth beyond the resource sector. This shift could foster job creation, boost exports, and reduce macroeconomic volatility, thereby promoting more inclusive growth. PNG experienced robust economic growth in 2024, surpassing the historical average, largely driven by the non-resource sector. Overall GDP growth reached 3.8 percent, mirroring 2023 but slightly below the structural peer average. The non-resource sector’s growth was fueled by increased agricultural production and higher commodity prices, particularly cocoa, coffee, and copra oil. Despite the reopening of the Porgera gold mine, its operation at lower-than-expected capacity has resulted in sluggish growth within the resource sector. Headline inflation experienced a notable decline to 0.6 percent, largely influenced by non-tradeable goods. However, core inflation, measured by the BPNG trimmed mean, increased to 3.3 percent, reflecting higher transport costs and the diminishing impact of education subsidies. In January 2024, the BPNG implemented a crawl-like exchange rate regime to enhance the convertibility of the kina and tackle ongoing foreign exchange shortages. This adjustment has allowed the kina to become more flexible, contributing to a reduction in its real overvaluation. The gradual depreciation of the kina is bolstering PNG’s external competitiveness. To ensure consistency with the new regime and keep inflation expectations in check, monetary policy generally remained tight throughout 2024 and in the first half of 2025. The depreciation of the kina, stronger foreign currency inflows from both the resources and agricultural sectors, along with various measures taken by the BPNG, have helped ease foreign exchange shortages. However, the combination of increasing interest rates, reduced liquidity, and delays in launching significant resource projects led to a notable decrease in private sector credit growth.