After the setback to growth last year due to the outbreak of the Delta variant of COVID-19, economic activities in Brunei Darussalam are gradually picking up, particularly in the non-oil and gas (O&G) sector.
High vaccination rates have allowed containment measures and border restrictions to be lifted, enabling fuller economic re-opening. Higher global energy prices have also benefitted the Sultanate, helping to improve the external position and restore fiscal buffers.
This preliminary assessment was made by the ASEAN+3 Macroeconomic Research Office (AMRO) after its annual consultation visit to Brunei from November 26 to 30, 2022.
While the ongoing rejuvenation effort in the O&G sector has an effect on growth, the outcome would result in an improved asset reliability and production availability.
Continuing diversification in the non-O&G sector, including the nurturing of new areas of growth (such as digitalisation and green investment), will help foster resilience and put the economy on a stronger footing in the long run.
The discussions mainly focussed on the outlook for the post-pandemic recovery, global spillover risks from the conflict in Ukraine and tightening global financial conditions, as well as longer-term development challenges.
“The highly comprehensive COVID-19 vaccination programme has enabled the Sultanate to shift to an endemic phase, allowing fuller economic re-opening and the recovery of economic activities, particularly in the services sector.”
AMRO also said, “Despite this positive development, the economy is expected to register a negative growth of 1.2 per cent in 2022, weighed down by the decline in the upstream O&G production,” said Tan. “Nonetheless, the diversion of domestic gas supply to the downstream activities has contributed to stronger performance of the non-O&G sector, helping to support growth.”
Inflation has risen to a multi-year high, mainly on rising global food prices. The conflict in Ukraine has impacted global commodity prices and disrupted supply chains. While global commodity prices have fallen in recent months, inflation is likely to remain high at 3.7 per cent in 2022.
Source: Borneo Bulletin
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January 27, 2023
