Brunei Darussalam is poised for economic growth, with the latest quarterly outlook from the ASEAN+3 Macroeconomic Research Office (AMRO) projecting a 1.1 per cent growth for 2023 and an expected 2.0 per cent growth in 2024.
This upward revision comes as a result of AMRO’s October quarterly update of the 2023 ASEAN+3 Regional Economic Outlook (AREO), which increased the Sultanate’s growth forecast from its previous estimate of 1.0 per cent made in July.
In addition to the growth forecast adjustments, AMRO also revised Brunei’s inflation outlook.
For 2023, the inflation forecast was raised to 1.0 per cent, up from the previous estimate of 0.9 per cent, while the 2024 inflation outlook was increased to 1.1 per cent.
The report highlighted that despite a less optimistic global economic outlook for the following year, the region’s growth will be bolstered by an expected turnaround in manufacturing exports and improved growth momentum in China.
The broader ASEAN+3 region is projected to grow by 4.3 per cent in 2023, slightly down from the 4.6 per cent projection in July. The dip is primarily attributed to weaker-than-expected growth in China during the second quarter of the year.
Nevertheless, AMRO anticipates a rebound in 2024, with a growth rate of 4.5 per cent. This is expected to be driven by China’s policy support measures to boost domestic demand, a gradual increase in durable goods consumption in the United States (US), and the anticipated recovery of the global technology sector, all of which are likely to boost regional exports.
Chief Economist at AMRO Hoe Ee Khor emphasised the need to consider the broader context, stating, “Despite the gloomy headlines surrounding China’s economic performance, we must view things in perspective. Beyond the real estate sector, manufacturing investment is holding up, and consumer spending is starting to get back on track -these should have positive spillover effects across the rest of ASEAN+3.”
Inflation in the ASEAN+3 region, excluding Laos, is expected to moderate to 2.6 per cent in 2024, down from the 2.9 per cent estimate for 2023.
However, concerns arise from the resurgence of global food and energy prices in recent months, potentially leading to another commodity price spike and an increased risk of higher inflation.
Khor also cautioned about the wildcard factor of El Niño on inflation, particularly if it results in more restrictive trade policies on key agricultural imports like rice. Additionally, the strength of the US dollar relative to the region’s currencies could sharpen the impact of commodity prices on inflation in the ASEAN+3 region.
AMRO’s report also warned against dismissing the risk of recession in the US and the Europe area, especially in a scenario where global interest rates remain elevated.
Should a recession materialise in both economies, it could push growth in the ASEAN+3 region below three per cent, marking the lowest level since 1998, excluding the pandemic-induced slowdown of 2020.
These findings are part of the latest quarterly update of AMRO’s flagship report, the AREO. The next update is scheduled for publication in January 2024. – Azlan Othman
