Brunei Darussalam, along with other Southeast Asian economies, will endure a growth slowdown in 2020 due to COVID-19 and a consequent global slump, especially given their strong trade and investment ties with a slowing People’s Republic of China.
Brunei Darussalam’s gross domestic product (GDP) growth is forecast to continue to grow above trend, albeit at a slower pace at two per cent this year, before picking up to three per cent next year (2021), according to the Asian Development Outlook (ADO) 2020, the Asian Development Bank’s (ADB) annual flagship economic publication, released recently.
Drop in oil prices, travel bans and border closures have hurt the tourism industry.
Liquefied natural gas and crude oil prices are expected to fall in 2020, owing to weak global demand, which will weigh heavily on export earnings.
In 2021, anticipated recovery in liquefied natural gas and crude oil prices should, along with exports from a newly-built fertiliser plant, will support export growth, said ADB.
Regional economic growth in developing Asia will decline sharply in 2020 due to the COVID-19 pandemic, before recovering in 2021.
The report forecasts regional growth of 2.2 per cent in 2020, a downward revision of 3.3 percentage points relative to the 5.5 per cent which ADB forecast in September 2019. Growth is expected to rebound to 6.2 per cent in 2021, assuming that the outbreak ends and activity normalises.
“The evolution of the global pandemic — and thus the outlook for the global and regional economy — is highly uncertain. Growth could turn out lower, and the recovery slower, than we are currently forecasting. For this reason, strong and coordinated efforts are needed to contain the COVID-19 pandemic and minimise its economic impact, especially on the most vulnerable,” said ADB Chief Economist Yasuyuki Sawada.
Growth in Southeast Asia will decelerate from 4.4 per cent in 2019 to one per cent in 2020, before rebounding to 4.7 per cent in 2021.
The economies in the sub-region will post lower growth in 2020 than in 2019, because of COVID-19, especially considering the sub-region’s strong trade and investment ties with the People’s Republic of China.
Thailand, the second-largest economy in the sub-region, will likely contract by 4.8 per cent this year, continuing a steady slide in recent years.
Growth in the closely intertwined economies of Malaysia and Singapore will plummet to nearly zero in 2020, with only Malaysia enjoying a strong rebound next year.
Cambodia and Indonesia will see sharp deceleration, as will the Philippines, despite expansionary government policies, which should facilitate an upturn in 2021. Growth in Vietnam is forecast to decelerate significantly but remain uniquely robust in the sub-region. With most economies weakening and global oil prices softening, sub-regional inflation should stay tame at just 1.9 per cent in 2020 and 2.2 per cent in 2021.
Counting mitigated deflation in Brunei Darussalam, eight of the 11 economies will see somewhat higher inflation this year, because of continued food price pressure, but inflation will slow in Myanmar and the Philippines and reverse to a deflation in Thailand.
The Ministry of Finance and Economy (MoFE), on behalf of the Autoriti Monetari Brunei Darussalam (AMBD) and Brunei Association of Banks (BAB), recently announced various interim measures aiding micro, small and medium enterprises (MSMEs) and individuals affected by the COVID-19 pandemic.
Minister at the Prime Minister’s Office and Minister of Finance and Economy II Dato Seri Setia Dr Awang Haji Mohd Amin Liew bin Abdullah revealed that these steps include an additional economic relief package from April 1, amounting to approximately BND250 million in the form of deferment of principal or loan repayment and exemption of fees and charges.
This measure, combined with previously announced fiscal assistance – such as deferment of payments on the Employees Trust Fund (TAP) and Supplemental Contributory Pension (SCP) contributions and increasing the capacity of workers – including business productivity – will boost the economic stimulus package for Brunei Darussalam for COVID-19, totalling BND450 million.
The packages announced are specific to business sectors in the country and individuals, including those who are self-employed. The additional assistance hopes to ease the financial burden on businesses and affected individuals.
The packages are deferment of principal payment of loans or financing for all sectors; restructuring and deferring principal amounts on personal loans and hire purchase facilities such as car loans or financing for not more than 10 years; provision of deferment of principal amount or financing for real estate; restructuring the outstanding credit card balance to loans for a period of not more than three years for individuals affected in the private sector including the self-employed, but this measure will not increase the credit card limit amount during the three-year period; and all bank fees and charges, except for third-party charges will not be applied.