Brunei growth may jump to 3.4pc
BANDAR SERI BEGAWAN (Borneo Bulletin/ANN) - The Asean+3 Macroeconomic Research Office (AMRO), a regional research group, has set a growth forecast of 3.4 per cent for Brunei Darussalam for next year, according to the October 2018 issue of its Regional Economic Outlook report.
The same report projects the Sultanate’s economic growth for this year at 1.6 per cent.
The AMRO’s revisions mirror similar projections by the International Monetary Fund (IMF) in May this year, whereby the IMF stated that Brunei’s GDP growth is expected to pick up to one per cent in 2018 – reflecting higher oil outputs – and shoot drastically to eight per cent next year.
Meanwhile, in the Asia Development Outlook 2018 (ADO 2018) published last month, the Asian Development Bank (ADB) has estimated Brunei’s GDP growth to be two per cent this year.
A huge increase in domestic investment into oil and gas extraction is propping up growth more than previously foreseen, the report said, with Brunei also projected to record two per cent GDP growth next year.
Brunei’s Department of Economic Planning and Development (JPKE) in July this year said that in the first quarter of 2018 (Q1 2018), the country’s GDP posted a positive growth of 2.5 per cent year-on-year at constant prices. GDP at current prices was estimated at BND4.4 billion in Q1 2018, compared to BND4.3 billion in Q4 2017.
AMRO in its report on the Sultanate recently said that a moderate recovery in oil and gas prices and further progress in major infrastructure and FDI construction projects are expected to contribute to positive GDP growth this year.
The report also said that the country’s current account surplus is expected to show improvements from 2019 onwards as the downstream industries begin their commercial production and exports.
Looking ahead however, the AMRO said that high reliance on oil and gas-related factors will continue to present risks to the economy and the fiscal sector.
Speaking of risks, there are two main ones relating to the oil and gas sector: unexpected disruption in production due to ageing oil fields, and unfavourable global oil and gas prices in the medium term. Brunei’s economic growth as well as its fiscal sector are highly dependent on oil and gas production and global energy prices.
As the government sector plays a very significant role in the economy – government consumption and investment accounts for more than 30 per cent of the GDP – a further decline in oil and gas-related revenue may significantly limit the government’s capacity to support growth.