Brunei Darussalam’s gross domestic product (GDP) is expected to grow at 1.6 per cent in 2020, according to a forecast by a macroeconomic surveillance organisation, Asean+3 Macroeconomic Research Office (AMRO).
The only countries with expected positive growth are Brunei, Vietnam (3.1 per cent), China (2.3 per cent), Myanmar (1.1 per cent), and Laos (0.5 per cent).
The sultanate would grow at 3.1 per cent next year, AMRO – which has members from ASEAN’s 10 member countries, China, Japan, and South Korea – said on August 6. In April, the International Monetary Fund (IMF) said Brunei’s GDP growth is projected to be 1.3 per cent this year and 3.5 per cent next year. It said this in its first World Economic Outlook report.
In June this year, the Asian Development Bank (ADB) forecast the Sultanate GDP growth at 1.4 per cent this year, but to bounce back to three per cent next year.
According to AMRO, the opening up of economies in Asean has led to renewed outbreaks of COVID-19 in several places as authorities began to retighten restrictions.
Strict containment measures to prevent the virus from spreading have caused economies to come to a standstill, leading to massive increases in unemployment, disruptions to businesses, and widespread collapse in domestic demand.
Additionally, bans on international travel have decimated the region’s all-important tourism sector. Still, AMRO Chief Economist Dr Hoe Ee Khor expects a gradual U-shaped recovery in the Asean+3 region, led by China.
“Regional growth is expected to slow sharply this year, to zero per cent, from 4.8 per cent in 2019, before rebounding strongly to six per cent in 2021,” Hoe said.
Hoe said nine of the 14 Asean+3 members were expected to contract this year, while economies projected to record positive growth rates were China and smaller Asean economies – Brunei Darussalam, Laos, Myanmar and Vietnam.
AMRO said its growth trajectory was predicated on the effective containment of the COVID-19 virus, both regionally and globally.
It said the resurgence in infections in some parts of the region had heightened caution about another spate of lockdowns, which the Asean+3 economies can ill-afford, even though most still have some fiscal and monetary space to provide support if needed.
AMRO group head and lead specialist for financial surveillance and acting group head for regional surveillance Dr Li Lian Ong said the biggest challenge facing Asean+3 policymakers in the second half of 2020 would be balancing the trade-off between easing restrictions to revive their economies and risking another wave of infections.
“Managing the exit from the raft of pandemic policies will be key to regional financial stability,” said Li.