Brunei Darussalam’s gross domestic product (GDP) growth is projected to be 1.8 per cent last year, 4.7 per cent this year, 3.6 per cent in 2021 and 3.5 per cent in 2022, according to a new report by the Pacific Economic Cooperation Council (PECC).
The 14th annual State of the Region report for 2019-2020 by the PECC which was released recently also highlighted that economic growth in the Asia-Pacific region is expected to decline to 3.3 per cent in 2019 and to remain at this level until 2024, a drop from the 3.8 per cent recorded in 2017 and 2018.
Global trade war and rising protectionism has taken its toll on Asia-Pacific economic growth. The report includes the results of a survey of 627 regional policy experts on key developments and challenges the Asia-Pacific region is facing. According to the survey, the top five risks to regional growth in the coming two to three years are increased protectionism and trade wars, slowdown in world trade growth, slowdown in the Chinese economy, slowdown in the United States (US) economy and lack of political leadership.
The report shows the mood across Asia-Pacific has soured since last year with expectations for global growth turning distinctly negative. Regional economic growth is expected to slow from 3.8 per cent in 2018 to 3.3 per cent this year.
Of greater concern is the sharp slowdown in the external sector with export growth slowing from four per cent in 2018 to just 0.9 per cent this year. While governments are acting to moderate a slowdown through stimulus measures and primarily interest rate cuts, other actions are also needed.
However, there remain some bright spots, with the regional policy community optimistic about the prospects for growth in Southeast Asia over the next year.
PECC Secretary General Eduardo Pedrosa said, “42 per cent of respondents to our survey are bullish on Southeast Asia. We believe this is because there is strong momentum towards integration in the region with the ASEAN Economic Community, many of them are in a demographic sweet spot, and there may be expectations of trade diversion.”
In its Policy Statement 2/2019 released by Autoriti Monetari Brunei Darussalam (AMBD) recently noted that the global economy is expected to grow three per cent in 2019. The domestic economy grew by 2.9 per cent year-on-year in the first half of 2019. Asian Development Bank (ADB) has recently upgraded economic growth forecast for Brunei Darussalam whereby the Sultanate’s GDP growth rate is forecasted to be one per cent in 2019 and 1.5 per cent this year.
The report also includes PECC’s innovative index on connectivity in the region. “Regional economic integration is not an end in itself. The ultimate objective is better quality of life and opportunity. Freer trade is a part of that, but we need the connectivity – the infrastructure, the ports, the customs, the education exchange and so on to make sure people can benefit from trade – to make trade inclusive,” explained Pedrosa.
The report reveals the Asia-Pacific region is most connected through physical infrastructure – transport, technology, energy, at 63.3 points, but needs to improve its people-to-people connectivity with business travel, tourism, labour mobility, migration and others at 36.1 points.
In the region, physical connectivity accounts for 41 per cent of connectedness followed by institutional at 35 per cent, and people-to-people at 24 per cent. While there are some differences by economy, the pattern is fairly common across all economies in the region, irrespective of the level of development.
Pedrosa said, “The issue around connectivity is not just one for economists and statisticians but is critical for policy-makers to understand how they can improve people’s quality of life and increase access to opportunities. Free and open trade are necessary but are not sufficient on their own. The index showed that the region needs to make more progress in areas such as infrastructure, transport, trade facilitation, education mobility, and labour exchange.
It also highlighted that Brunei Darussalam and Chile had similar scores on physical connectivity, Chile is above the best fit line due to its lower GNI per capita while Brunei Darussalam is below the line.
The physical connectivity pillar covers four sub-indices: infrastructure; transport; information and communications technology; and energy. In turn, these are composed of a total of 16 indicators. Each sub-index was weighted equally at 25 per cent each.
Meanwhile, the results for people-to-people connectivity for Brunei is 54.4 per cent. The Sultanate performed very strongly on two sub-indices of this pillar namely educational mobility and social media penetration at 14.6 per cent and 14.3 per cent respectively. In fact the report indicated that Brunei Darussalam has the highest social media penetration among the Asia-Pacific economies with 14.8 per cent.