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Brunei – Domestic economy contracts by 1.5pc: BDCB
Brunei Darussalam Central Bank (BDCB) said the domestic economy contracted by 1.5 per cent year-on-year in the first half of 2021.
In its second policy statement published yesterday, BDCB also said this is largely driven by the contraction in the oil and gas sector.
In line with the global inflation forecast which is expected to rise modestly and the recent tightening of monetary policy by the Monetary Authority of Singapore, BDCB’s inflation forecast for 2021 will remain in the range of one per cent to two per cent.
BDCB also noted that the global economy is expected to grow by 5.9 per cent in 2021. This is a downward revision in part due to supply disruptions in advanced economies and worsening pandemic situations in a number of emerging and developing economies.
The outlook to the global and regional economy is dependent on respective countries’ abilities to mitigate the impact of COVID-19, vaccination progress, and provision of adequate stimulus.
In terms of the financial sector development, BDCB witnessed a notable growth in total assets of 7.5 per cent year-on-year.
Nonetheless, the overall risk level of the banking sector in the third quarter (Q3) of 2021 heightened slightly from second quarter (Q2) of 2021 due to spillover effects of the second wave of coronavirus outbreak to the financial sector.
Despite the ensuing impact from the COVID-19 outbreak, the capital position of the banking industry as of Q3 2021 remains robust, with an aggregate capital adequacy ratio of 20.3 per cent.
Nevertheless, in light of the heightened uncertainties associated with the COVID-19 pandemic as well as the low global interest rates environment, the profitability of the banking industry has also declined.
BDCB has taken appropriate measures including the issuance of advisory letters to all licensed financial institutions in the Sultanate and BDCB Fintech Regulatory Sandbox participants to strengthen the necessary steps in curbing the spread of the virus, and to ensure safe business operations.
In upholding public confidence, all financial institutions are also advised to ensure sufficient cash are available.
Furthermore, temporary regulatory flexibility has been provided to banks and finance companies on loan/financing classification.
The full version of BDCB Policy Statement 2/2021 can be found at BDCB’s website at www.bdcb.gov.bn. For further information and enquiries, contact BDCB by calling 2388388 or by e-mailing to [email protected].
Source: https://borneobulletin.com.bn/domestic-economy-contracts-by-1-5pc-bdcb-2/