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Brunei Darussalam projected to post strong GDP growth
BRUNEI Darussalam was included in a number of recently released studies and economic outlook reports.
It was reported on May 18 that the International Monetary Fund (IMF)’s latest Regional Economic Outlook for Asia and the Pacific said Brunei Darussalam’s gross domestic product (GDP) growth is expected to pick up to one per cent in 2018, reflecting higher oil output, and shoot drastically to eight per cent next year.
This contrasts with the IMF’s outlook released in October 2017, which projected less GDP growth for this year at 0.6 per cent. Brunei’s growth recovered to 0.5 per cent in 2017, turning positive for the first time since 2012, mainly driven by the non-oil-and-gas sector, IMF said.
While no details were given by the Fund to back such an increase in GDP growth next year for Brunei, the IMF in its report last year noted that over the medium term, the growth outlook of the country will further improve with the start of downstream production from new energy facilities, a new gas field and public investment under the next five-year development plan. According to IMF, these are projected to result in robust GDP and export growth during 2019-2022.
Meanwhile, as reported on May 5, the ASEAN+3 Macroeconomic Research Office (AMRO)’s recent ‘ASEAN+3 Regional Economic Outlook (AERO) 2018’ report said that Brunei Darussalam is projected to post the strongest gross domestic product (GDP) growth, which almost tripled from the 0.6 per cent in 2017 to 1.6 per cent in 2018 and is expected to double to 3.4 per cent in 2019.
ASEAN+3 includes the 10 ASEAN economies and three other large economies, namely China, Japan and South Korea.
AMRO said that after four years of contraction, Brunei’s economy showed signs of improvement, driven by a recovery in the oil and gas sector and an expansion in investment.
Since the second quarter of 2017, growth has improved on the back of higher oil and gas production and expanding private investment.
A moderate recovery in oil and gas prices and further progress of major infrastructure and foreign direct investment (FDI) construction projects are expected to contribute to positive GDP growth of 0.6 and 1.6 per cent in 2017 and 2018, respectively.
Another recent study was the Asian Development Bank (ADB)’s 2018 Asean Development Outlook (ADO) that was released on April 11. Citing a rise in global oil prices and the strengthening of major industrial economies, ADB said that Brunei Darussalam’s economy will grow at 1.5 per cent this year, and further to two per cent next year. “With a rise in global oil prices, the economy seems to have posted marginally positive growth in 2017, for the first time in five years. Growth should strengthen 1.5 per cent this year and two per cent next year.
Inflation is likely to edge up but continue to be low and the current account will continue to post substantial though narrowing surpluses. Enhancing domestic competition is key to diversifying the economy.”
ADB said Brunei’s GDP is estimated to have grown by 0.8 per cent in 2017, following four years of economic contraction.
Last year’s turnaround to marginal growth was underpinned by increased government consumption and a recovery in fixed investment, it noted.
Government expenditure on consumption, which had declined by 6.5 per cent in 2016, rose by 10.2 per cent in the first nine months of last year over the same period a year earlier. It is likely to have kept up that pace in the last quarter as higher international oil prices boosted government revenues.
It was also shared that data for the first three quarters of 2017 suggests that a recovery in investment is under way, with fixed investment growing by 11 per cent year-on-year. Even as higher oil prices boost export revenues, export volumes of goods and services continued to decline, dragging on GDP growth, ADB said.
On the country’s economic prospects, the ADB said a favourable economic outlook for the major industrial economies and higher global oil prices this year and next should help Brunei Darussalam build on last year’s turnaround and post GDP growth at 1.5 per cent in 2018 and two per cent in 2019.
As for the demand side, investment is expected to continue to recover and support growth in both years. Government and private consumption should expand modestly, supported by rising oil and gas revenues, higher lending to households and a better business environment.
The ADB’s report adds that industry is likely to accelerate from marginally positive growth last year to 1.9 per cent this year and 2.5 per cent next.
Within industry, gas output could rise, though crude oil output will remain constrained by commitments to internationally agreed production cuts. Meanwhile, industry other than oil and gas will continue to develop.
Source: https://borneobulletin.com.bn/brunei-darussalam-projected-to-post-strong-gdp-growth/