The Asian Development Bank is predicting just over one percent growth down from a forecast 2.2 percent in April.
After the Hela quake, liquefied natural gas production in the region's biggest economy is forecast to be down at least ten percent on 2017 levels.
LNG accounts for 14 percent of Papua New Guinea's earnings.
But the bank says strong logging and mining has improved the outlook for Solomon Islands and fishing license revenue has done the same for Tuvalu.
Nauru also sees an improved growth forecast for the year to 3.8 percent.
Next year the bank predicts growth in the region to accelerate, up to 3.1 percent.
Regional inflation remains steady at 4.2 percent.
The ADB's forecasts for 2018 growth remain unchanged for Fiji at 3.6 percent, Vanuatu at 3.2 percent, the Cook Islands at percent, Samoa at 0.5 percent, Tonga at -0.3 percent, Kiribati at 2.3 percent, the Federated States of Micronesia at 2.0 percent, and the Marshall Islands at 2.5 percent.