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Brunei poised for stronger recovery led by the non-O&G sector

Brunei Darussalam’s economy is poised for further strengthening this year, driven by a strong recovery in 2023 and robust activities in the non-oil and gas sector, according to a report by the ASEAN+3 Macroeconomic Research Office (AMRO).

The downstream oil and gas industry is expected to remain supportive of growth, with planned diversification into new products. Despite challenges in ongoing oil and gas rejuvenation efforts, activities are projected to improve, leading to enhanced production in the near term. The government’s commitment to accelerating diversification towards less carbon-intensive industries aims to bolster economic resilience.

A man takes a group photo in Brunei’s capital Bandar Seri Begawan. PHOTO: AFP

The report, based on AMRO’s Annual Consultation Visit to Brunei Darussalam in November 2023, and data available up to February 29, 2024, highlights Brunei’s economic developments and outlook. The economy expanded by 1.4 per cent in 2023, with growth expected to strengthen to 2.7 per cent this year, driven by exploration and development activities in offshore oil and gas fields.

Encouragingly, the non-oil and gas sector is anticipated to lead the economic recovery, supported by expansions in downstream activities, agri-food, transportation, and tourism sectors.

Inflationary pressures have eased, reflecting lower commodity prices and supply chain normalization post-pandemic. Headline inflation is projected to increase to 1.4 per cent this year, driven by food inflation.

Brunei’s external position remains strong, with sustained surplus in the balance of payments (BOP). However, risks and challenges persist, primarily from a deteriorating external environment, including global energy price fluctuations and recessions in major trading partners.

The report recommends long-term fiscal sustainability measures, strengthening public financial management, and enhancing regulatory frameworks in the financial sector.

Additionally, efforts to diversify the economy beyond oil and gas, address labor market structural challenges, and support micro, small, and medium enterprises (MSMEs) are crucial.

Furthermore, achieving ambitious climate objectives, including net-zero targets, requires leveraging mitigation technologies in the energy sector to foster a sustainable future. – Azlan Othman