Azlan Othman
Brunei Darussalam’s economy is projected to grow by 3.5 per cent this year and five per cent next year, according to the United Nations (UN) World Economic Situation and Prospects (WESP) 2022, launched recently.
The report said East Asia’s economic performance largely rebounded in 2021. Headline gross domestic product (GDP) growth was an estimated 6.7 per cent following the sharp deceleration in 2020. The recovery is nascent, however.
A resurgence of COVID-19 has disrupted economic performance supported by strong policy stimulus and a recovery in external demand. Economic growth is forecast to moderate to 4.9 per cent in 2022 as base effects disappear.
While countries’ re-opening could shore up economic activities, the uneven distribution of vaccines, a still low pace of vaccination and unknown vaccine efficacy against new variants of the virus mean that the pandemic will linger and could derail a fragile economic recovery.
The report added, vaccinations offer some hope, noting the Sultanate’s high vaccination rate. As of yesterday, 94.7 per cent received their first dose, 93.8 per cent the second dose and 34.7 per cent the booster shot. The country recorded 15,986 cases while 15,506 have recovered.
The report also said additional headwinds come from a possible decline in export demand, prolonged supply-side challenges, rising concerns around financial instability and the possibility of a larger-than-expected slowdown in China’s economy amid lingering trade tensions with the United States (US). Since pandemic control will continue as a policy priority in the near term, macroeconomic policies should remain accommodative and targetted to fostering an inclusive and sustainable recovery.
The uptick in East Asia’s headline GDP growth masks large divergence in economic performance across countries. Overall, relatively stronger recovery was seen in China, Korea and Singapore, due to early COVID-19 containment measures, quick vaccine roll-outs and strong external demand.
In contrast, the Delta variant outbreak slowed recovery in many countries in the Association of Southeast Asian Nations (ASEAN), including Indonesia, Malaysia, the Philippines, Thailand and Vietnam.
Tourism-dependent countries, especially the small island developing States in the Pacific, were hit doubly by new waves of COVID-19 and a plunge in tourist arrivals. Ongoing political turmoil has severely weighed on Myanmar’s economy.
On the global front, the report said that economic recovery is facing significant headwinds amid new waves of COVID-19 infections, persistent labour market challenges, lingering supply-chain challenges and rising inflationary pressures.
After expanding by 5.5 per cent in 2021, the global output is projected to grow by only 4.0 per cent in 2022 and 3.5 per cent in 2023.
The robust recovery in 2021 – driven by strong consumer spending and some uptake in investment, with trade in goods surpassing pre-pandemic levels – marked the highest growth rate in more than four decades, the report highlighted. Yet the momentum for growth – especially in China, the US and the European Union – slowed considerably by the end of 2021, as the effects of monetary and fiscal stimuli began to recede and major supply-chain disruptions emerged. Rising inflationary pressures in many economies are posing additional risks to recovery.
“In this fragile and uneven period of global recovery, the World Economic Situation and Prospects 2022 calls for better targetted and coordinated policy and financial measures at the national and international levels. The time is now to close the inequality gaps within and among countries. If we work in solidarity – as one human family – we can make 2022 a true year of recovery for people and economies alike,” said the Secretary General of the United Nations (UN) António Guterres.
With the highly transmissible Omicron variant of COVID-19 unleashing new waves of infections, the human and economic toll of the pandemic are projected to increase again.
“Without a coordinated and sustained global approach to contain COVID-19 that includes universal access to vaccines, the pandemic will continue to pose the greatest risk to an inclusive and sustainable recovery of the world economy,” said Under-Secretary-General of the UN Department of Economic and Social Affairs Liu Zhenmin.
