After registering contraction in real gross domestic product (GDP) for two consecutive years, Brunei is expected to grow by 2.6 per cent in 2023.
The optimistic outlook was shared by the Centre for Strategic and Policy Studies (CSPS) in its newly-released CSPS Brunei Economic Outlook 2023.
There is normalisation of economic activity following the lifting of COVID-19 restrictions, according to the think thank.
CSPS also foresees the growth of Brunei’s GDP being broad-based, indicating a diversification trend in the country’s economy.
The percentage share of crude oil and liquefied natural gas (LNG) in total exports has fallen sharply, from 90 per cent to 39 per cent between 2018 and 2022.
Other petroleum and chemical products now contribute to the bulk of Brunei’s exports. There is indeed robust growth in the non-oil and gas sector in 2022 and ammonia and urea production are expected to ramp up this year.
The lifting of pandemic restrictions has also enabled the recovery of services activities.
Travel and tourism are gradually recovering but remain below pre-COVID levels.
When it comes to the external environment, Brunei’s current account balance is predicted to remain high at 8.3 per cent of GDP in 2023.
The gross international reserves of the country are anticipated to rise from BND7,205 million to BND7,695 million between 2022 and 2023.
Inflation may have peaked in the third quarter of 2022 but remains historically high, which is also a major challenge for most economies around the world.
After reaching a peak of 4.5 per cent in August 2022, the year-on-year headline inflation dropped to 3.1 per cent in November, signalling an easing of inflationary pressures.
The labour market is improving, while challenges in hiring foreign labour are easing.
The unemployment rate fell to 4.9 per cent in 2021, the lowest since 1995.
The CSPS Brunei Economic Outlook 2023 states that the country’s fiscal position improved markedly in 2022 due to the escalation in oil and gas revenue.
The budget balance is expected to reach 0.5 per cent of GDP in 2023, the report added.