Brunei Darussalam’s gross domestic product (GDP) growth is forecast at 1.4 per cent, according to a report released by the Asian Development Bank (ADB) in its Asian Development Outlook (ADO) for September yesterday.
The forecast is similar to what the ADB has projected in June this year. ADB also forecast the Sultanate’s economic growth at three per cent next year.
ADB said yesterday that economies across developing Asia will contract this year for the first time in nearly six decades but recovery will resume next year, as the region starts to emerge from the economic devastation caused by the coronavirus pandemic.
According to the ADO 2020, there will be a contraction of 0.7 per cent in GDP growth for developing Asia this year, marking its first negative economic growth since the early 1960s.
Growth will rally to 6.8 per cent in 2021, in part because growth will be measured relative to a weak 2020. This will still leave next year’s output below pre-COVID-19 projections, suggesting an “L”-shaped rather than a “V”-shaped recovery.
About three-quarters of the region’s economies are expected to post negative growth in 2020.
During the last press conference updating on COVID-19 on September 3, 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 said Brunei Darussalam is forecast to experience positive GDP growth this year despite the COVID-19 pandemic.
Economies around the world have been undergoing lockdowns and suffered worse especially in the second quarter of this year with contractions as high as 20 per cent.
“As for Brunei’s economy, we are monitoring the second quarter closely as it is where the restrictions impacted the economy. The economic growth will not be as strong as the first quarter when the economy saw a growth of 2.4 per cent year-on-year. Figures from the second quarter will be revealed soon.
“As for third and fourth quarters of this year, better economic growth is expected as we are opening up our economy,” Dato Seri Setia Dr Awang Haji Mohd Amin Liew said.
Meanwhile ADB Chief Economist Yasuyuki Sawada said “most economies in the Asia and Pacific region can expect a difficult growth path for the rest of 2020. The economic threat posed by the COVID-19 pandemic remains potent, as extended first waves or recurring outbreaks could prompt further containment measures.
“Consistent and coordinated steps to address the pandemic, with policy priorities focussing on protecting lives and livelihoods of people who are already most vulnerable, and ensuring the safe return to work and restart of business activities, will continue to be crucial to ensure the region’s eventual recovery is inclusive and sustainable.”
A prolonged COVID-19 pandemic remains the biggest downside risk to the region’s growth outlook this year and next year. To mitigate the risk, governments in the region have delivered wide-ranging policy responses, including policy support packages – mainly income support – amounting to USD3.6 trillion, equivalent to about 15 per cent of regional GDP.
Other downside risks arise from geopolitical tensions, including an escalation of the trade and technology conflict between the United States (US) and the People’s Republic of China (PRC), and financial vulnerabilities that could be exacerbated by a prolonged pandemic.
The PRC is one of the few economies in the region bucking the downturn. It is expected to grow by 1.8 per cent this year and 7.7 per cent in 2021, with successful public health measures providing a platform for growth. In India, where lockdowns have stalled consumer and business spending, GDP contracted by a record 23.9 per cent in the first quarter of its fiscal year (FY) and is forecast to shrink nine per cent in FY2020 before recovering by eight per cent in FY2021.
Subregions of developing Asia are expected to post negative growth this year, except East Asia which is forecast to expand by 1.3 per cent and recover strongly to seven per cent in 2021. Some economies heavily reliant on trade and tourism, particularly in the Pacific and South Asia, face double-digit contractions this year.