In their January 2023 economic outlook, the ASEAN+3 Macroeconomic Research Office (AMRO) revised Brunei Darussalam’s economic growth to 2.8 per cent this year (2023), down from their previous forecast of three per cent last October.
This was highlighted in their ASEAN+3 Regional Economic Outlook (AREO) on January 17.
Their January 2023 outlook also trimmed the Sultanate economic growth for last year to negative 1.2 per cent (-1.2%), down from their earlier forecast in October of 0.7 per cent.
In its recent report, AMRO said higher global energy prices have also benefitted Brunei Darussalam, helping to improve the external position and restore fiscal buffers.
While the ongoing rejuvenation effort in the oil and gas (O&G) sector affects growth, the outcome would result in improved asset reliability and product availability.
Continuing diversification in the non-O&G sector, including the nurturing of new areas of growth (such as digitalisation and green investment), will help foster resilience and put the economy on a stronger footing in the long run.
Meanwhile, AMRO also revised downwards its short-term growth forecast for the ASEAN+3 region.
Deteriorating global economic conditions are weighing on the region’s outlook, but China’s reopening last December should provide some counterbalance.
In its January update, AMRO estimates ASEAN+3 growth for 2022 to come in at 3.3 per cent – down from the 3.7 per cent growth forecast in October. This is due mainly to continuing weakness in Plus-3 economies, especially China where growth has turned out to be much weaker.
Growth in the ASEAN region, buoyed by strong domestic demand, is revised upwards to 5.6 per cent.
This year, growth in the ASEAN+3 region is projected to strengthen to 4.3 per cent, as China’s economy is expected to rebound strongly reflecting the removal of containment measures and reopening of its economy.
Inflation is anticipated to come down to 4.5 per cent in 2023 from the projected 6.3 per cent spike last year. The weakening global environment has taken the wind out of the sails of the region’s external trade momentum.
The drag on economic activity from aggressive monetary policy tightening in the United States (US) and Europe area will be felt more fully this year, translating to softer export orders for the ASEAN+3.However, the ongoing resumption of tourism- especially with the return of Chinese tourists-will provide a much-needed boost to growth.
“With recession risks still haunting the US and Europe, China’s economic reopening cannot come at a better time for the region,” said AMRO Chief Economist Hoe Ee Khor. “China’s stronger economy will provide support for regional activity while the border reopening will boost intraregional tourism.”
Inflation is moderating across ASEAN+3, tempered by sustained policy tightening by central banks and easing global supply chain bottlenecks.
Oil prices have reverted to almost pre-pandemic levels reflecting weaker global demand.
Prices of key agricultural commodities – although remaining relatively high due to the prolonged war in Ukraine – have fallen from their peaks in 2022.
AMRO’s assessments are found in the latest quarterly update of its flagship report, the AREO.
The AREO 2023 will be published in April.