Pandemic recovery to boost Brunei GDP next year

Azlan Othman

Brunei Darussalam is seen posting the recovery in 2021, following the COVID-19 pandemic where the International Monetary Fund (IMF) is projecting that the Sultanate’s gross domestic product (GDP) growth to be 3.2 per cent next year while for its mid-term projections for 2025, IMF forecast the Sultanate’s growth to be 1.8 per cent. And for this year 0.1 per cent growth is expected.

This was highlighted by the IMF in its latest World Economic Outlook published last Tuesday.

In her foreword to the outlook, IMF Chief Economist Gita Gopinath said the latest forecasts for 2020 were “somewhat less severe though still deep” compared with IMF forecasts in June.

“The revision is driven by second quarter GDP out turns in large advanced economies, which were not as negative as we had projected,” she said.

Gopinath also highlighted “stronger than expected” growth in China — which is forecast to grow 1.9 per cent this year — and signs of a more rapid recovery in the third quarter.

“Out turns would have been much weaker if it weren’t for sizeable, swift, and unprecedented fiscal, monetary, and regulatory responses that maintained disposable income for households, protected cash flow for firms, and supported credit provision,” she said.

“Collectively these actions have so far prevented a recurrence of the financial catastrophe of 2008-09.”

Gopinath said near-term support policies “should be designed with a view toward placing economies on paths of stronger, equitable, and sustainable growth.” In the longer term, she highlighted the need for policymakers to “simultaneously aim to mitigate climate change and bolster the recovery from the COVID-19 crisis.

“This can be achieved through a comprehensive package that includes a sizeable green public infrastructure push, a gradual rise in carbon prices, and compensation for lower income households to make the transition fair.”

The IMF devotes an entire chapter of the World Economic Outlook to climate change. It finds that investing in green infrastructure could raise global activity “with modest output costs over the medium term as economies transition away from fossil fuels toward cleaner technologies.

“Relative to unchanged policies, such a package would significantly boost incomes in the second half of the century by avoiding damages and catastrophic risks from climate change.

“Moreover, health outcomes would begin to improve immediately in many countries thanks to reduced local air pollution,” the outlook said.

In early September this year, Minister at the Prime Minister’s Office and Minister of Finance and Economy II Dato Seri Setia Dr Awang Haji Mohd Amin Liew bin Abdullah highlighted during the COVID-19 press conference that Brunei is forecast to experience positive gross domestic product (GDP) growth this year despite the COVID-19 pandemic. Economies around the world have been undergoing lockdowns and suffered worse especially in the second quarter of this year with contractions as high as 20 per cent.

The Department of Economic Planning and Statistics (JPES) said previously that Brunei’s GDP recorded a positive growth of 2.8 per cent year-on-year in second quarter 2020 and 2.4 per cent for first quarter 2020.

“As for third and fourth quarters of this year, better economic growth is expected as we are opening up our economy,” Dato Seri Setia Dr Awang Haji Mohd Amin Liew said.

In April this year, IMF projected Brunei’s economic growth to be 1.3 per cent this year and 3.5 per cent next year. Meanwhile, according to a report released by the Asian Development Bank (ADB) in its Asian Development Outlook (ADO) for September, Brunei’s GDP growth is forecast at 1.4 per cent.

The forecast is similar to what the ADB has projected in June this year. ADB also forecast the Sultanate’s economic growth at three per cent next year.

On the other hand, the ASEAN+3 Macroeconomic Research Office (AMRO) expects Brunei’s GDP to be 1.6 per cent this year and 3.1 per cent in 2021, according to their September forecast, which is similar to their August projection.