ADB forecast for Brunei unchanged

The Asian Development Bank (ADB) said Brunei Darussalam’s economic growth forecast next year is 3.6 per cent, which is unchanged from their earlier projection in April on the assumption that crude oil prices will remain elevated in the medium term.

In its latest economic outlook published recently, ADB said the Sultanate’s gross domestic product (GDP) growth this year is projected at 2.2 per cent compared to their earlier forecast in April of 4.2 per cent.

Growth in 2023 will also be supported by the construction of the second phase of Hengyi Industries Sdn Bhd’s oil refinery and petrochemical project.

ADB added that the global economic impact of the Ukraine conflict and ongoing global supply chain disruptions pushed the Sultanate’s headline inflation rate to 3.9 per cent in April, its highest since 1995. In May, the rate eased to 3.8 per cent.

ADB also said risks to the outlook are fairly evenly balanced. An unanticipated disruption to oil and gas output is the main downside risk that could delay Brunei’s recovery. Persistently high inflation expectations could dampen domestic demand and a rebound in economic activity other than the oil and gas sector. An upside risk is another surge in oil and gas prices caused by the war in Ukraine intensifying.

The report said the Sultanate’s economy contracted by 4.2 per cent in the first quarter (Q1) of 2022, the sixth consecutive quarter of negative growth. The slowdown reflects a nine-per-cent decline in oil and gas output because of maintenance work.

Economic activity normalised in other sectors in the absence of tight COVID-19 restrictions, despite a surge in cases earlier this year. As a result, sectors other than the oil and gas expanded by one per cent in Q1, although the performance across sectors was mixed.

Agriculture, forestry, and fisheries grew by one per cent; services increased by just 0.4 per cent. Services were marked by a rebound in transportation and accommodation, but finance, communication, and restaurants dragged sector growth.