This return to growth follows a contraction of -3.5% in 2020, which the World Bank says is mostly driven by strong performance in the non-extractive sector, with agriculture being a key contributor to economic recovery.
Despite the challenging external environment, the economic outlook in PNG remains positive, underpinned by a projected recovery in the extractive sector, higher commodity prices, and gradual recovery in economic activity.
On top of this, the easing of pandemic policies by local authorities is increasing domestic economic activity.
PNG World Bank country manager Stefano Mocci said it was encouraging to see the economy returning to growth after a very challenging last few years.
"Now is the time to consolidate economic reforms that focus on key development challenges for the benefit of all the people in the country," he said.
"With a growing young population, PNG's future growth and quality of life hinge on improving human capital. While PNG's wealth has been dominated by natural capital, over the decades PNG has made limited progress in improving human capital and it is vital for government and its partners to invest in this area."
Mocci said the World Bank would continue to work closely with the government to help create opportunities and improved access to markets, education, and health which would be essential to creating sustainable growth.
Agriculture played a key role in the economic recovery beginning last year driven by higher export volumes of tea, palm oil, and copra.
The extractive sector did not rebound last year also due to disruptions to mining operations.
Nonetheless, elevated prices for commodities - in particular natural gas - will likely provide the country with additional revenue this year.
World Bank country economist for PNG Ruslan Piontkivsky said international commodity markets had been performing well for PNG, helping the economy to grow, and revenue coming into the national budget had increased, The National newspaper reported.