Brunei Darussalam’s economic growth is projected at 1.0 per cent this year (2023) and 2.2 per cent next year (2024), according to the ASEAN+3 Macroeconomic Research Office’s (AMRO) quarterly update of the ASEAN+3 Regional Economic Outlook (AREO) published this month.
For comparison, AREO forecast the Sultanate’s GDP growth to be 2.6 per cent this year and 2.8 per cent next year in its April 2023 projection.
The report said AREO 2023–24 growth forecasts for ASEAN+3 economies are largely unchanged from the April AREO 2023.
The ASEAN+3 region is still expected to grow by 4.6 per cent in 2023. The growth forecast for the Plus-3 economies has been raised slightly to 4.6 per cent from 4.5 per cent in AREO 2023, reflecting the stronger inbound tourism and domestic demand in Hong Kong and Japan.
At the same time, the growth forecast for ASEAN has been revised downward to 4.5 per cent from 4.9 per cent in April, reflecting the impact of weaker external demand on Singapore and Vietnam. In 2024, ASEAN+3 is expected to grow by 4.5 per cent.
AREO 2023–24 headline inflation forecasts for the 12 ASEAN+3 economies (excluding Laos and Myanmar) are revised downward from AREO 2023. Headline inflation for the 12 ASEAN+3 economies is now expected to moderate to 3.0 per cent in 2023 from 4.1 per cent in 2022.
However, some of the economies, such as the Philippines and Singapore, will continue to see headline inflation above five per cent this year mainly due to higher domestic costs pressures.
In 2024, headline inflation for the 12 ASEAN+3 economies is expected to moderate further to 2.4 per cent. In contrast, headline inflation in Laos and Myanmar have been revised upward to around 25 per cent to reflect the lingering effects of sharp currency depreciation in both economies.
Downside risks to the growth outlook for the region have, on balance, receded since AREO 2023. This is mainly due to the following factors: economic activity in the advanced economies have been quite resilient, stress in the global banking system has eased since March 2023, and commodity prices have been lower-than expected.
The main risks currently on the horizon are recession in the United States (US) and Europe, faltering economic growth in China. In addition, other down side risks are financial spillovers from tight(er) US monetary policy, and spike in global commodity prices whereby ongoing geopolitical developments will continue to drive supply dynamics, despite the easing of global commodity prices since last year. Global energy and food prices could spike again as the Ukraine crisis continues to unfold with the potential for dangerous escalation.
The report also said ASEAN+3 also continues to face overlapping sets of perennial risks to macrofinancial stability. Of note, extreme weather events arising from climate change-along with global policy efforts to rapidly mitigate greenhouse gas emissions-pose short- and long-term risks to many economies in the region, and these could exact a large toll on fiscal health and financial system stability. While the nearterm risk from COVID-19 has receded, health experts warn of the possible emergence of new infectious diseases globally. Such a scenario could inflict additional economic scars across the ASEAN+3 region.
Domestic demand in the ASEAN+3 region remained resilient in the first quarter of 2023.
Private consumption growth stayed firm in most economies, sustained by steady recovery in the labour market and easing inflation. In China, economic activities rebounded strongly in the first quarter of 2023 after the post-pandemic reopening late last year. Investment activities, previously disrupted by pandemic restrictions, also picked up pace.
The report added, headline inflation moderated across most of the region, thanks to easing global commodity prices and normalisation of supply chains. Headline inflation remained relatively elevated in the Philippines and Singapore due mainly to supply constraints in various sectors. Core inflation (which excludes food and energy prices) has been relatively sticky, especially in economies where demand conditions were strong.
Weak global demand depressed ASEAN+3 goods exports in the first half of 2023, but signs of a turnaround are emerging. In the meantime, services exports – particularly tourism-are posting a rapid recovery. Tourist arrivals into the Plus-3 and CMV economies exceeded 50 per cent of the pre-pandemic level in the first quarter of 2023, and the steady return of Chinese visitors is poised to boost the sector further. Intra-regional tourism has been particularly robust, offsetting the slow return of tourists from China thus far due to the late re-opening of borders. – Azlan Othman
