Brunei Darussalam’s fiscal deficit is forecast to narrow further to 6.9 per cent of gross domestic product (GDP) this year, following a substantial improvement in 2021, owing to higher oil and gas revenue.
Meanwhile, Brunei’s economy is forecast to expand by 3.7 per cent in 2022, after contracting by an estimated 1.5 per cent in 2021.
This was according to the Brunei think-tank Centre for Strategic and Policy Studies (CSPS) on the country’s economic outlook published recently.
CSPS said growth in 2021 is expected to be broad-based, largely supported by the downstream oil and gas and services sectors. Despite the growth rebound, the level of output remains well below pre-pandemic projections.
Inflation is projected to moderate to 1.3 per cent in 2022, but is still historically high.
However, the baseline projections are subject to considerable uncertainty and could, again, be derailed by a materialisation of several risks. These include a resurgence of the pandemic, prolonged supply bottlenecks, oil market uncertainty, and unanticipated domestic oil and gas supply disruptions.
Policy priorities should focus on driving economic recovery especially in the worst-hit sectors, strengthening resilience including increasing investment in the public health system and intensifying digital transformation, enhancing fiscal space by expanding the revenue base and increasing spending efficiency, and advancing structural reforms such as building a more resilient education system, improving the business environment, and strengthening public service delivery.
Last week, the ASEAN+3 Macroeconomic Research Office (AMRO) flagship report titled ASEAN+3 Regional Economic Outlook (AREO) said Brunei’s economic growth is projected to be 4.1 per cent in 2022 and 0.2 per cent in 2021.