Brunei Darussalam Central Bank (BDCB) has released the Business Sentiment Index (BSI) for December 2024. The BSI, derived from surveys of more than 500 businesses of varying sizes across 11 key economic sectors, measures current and future business confidence in the Sultanate.
The main headline index, the Current Business Conditions sub-index, was 50.0 in December, reflecting business conditions were generally expected to be similar to November 2024. Many businesses highlighted the impact of school holidays on their performance, with sentiments varying across sectors.
The expectations for improved business conditions were cited from travel-related companies, businesses participating in year-end events, and those that held end-of-year or back-to- school promotions. Meanwhile, pessimistic remarks were generally attributed to sluggish market conditions, with businesses expecting increased overseas spending as consumers tend to travel during the holiday season.
For others, the lack of new projects, reduced activities associated with workers going on leave, and weather-related issues were also reasons for their pessimistic sentiment in December 2024. The index for one month (1M) ahead was 50.4, indicating expectations for better business conditions in January 2025 compared to December 2024.
In general, many businesses see the new year as a bright start following the return of consumers from holldays and the expectations of improved sales performance, as consumers will likely spend their end-of-year bonuses in January 2025. This also includes spending at the 30th Consumer Fair and Trade Expo and Chinese New Year festivities in the same month.
The Investment sub-index stood at 50.1 for December 2024, 50.0 for one month (1M) ahead, and 50.1 for three months (3M) ahead, This indicates that businesses anticipate a slight increase in investments in December 2024 and maintaining this level into January 2025, For some businesses, this is related to stocking up on inventory, as observed in previous months. On the other hand, project based businesses are focused on completing year-end projects and ongoing renovations. Hence, they do not foresee an immediate need to increase their level of investments until after Ramadhan, when an uptick in the number of projects is expected. Businesses also generally expect to replenish inventories in March 2025 in preparation for increased demand for the Hari Raya Aidilfitri festivities.
The Employment sub-index was 50.2 for the current month and 50.3 for IM ahead.
Continuing the trend from previous months, businesses expect to onboard new full-time and part-time employees in December 2024 and January 2025 to cater for ongoing and upcoming projects and events. Some businesses also indicated the need to increase their workforce in specific departments, such as IT and administration, and replace outgoing staff due to the high turnover rate.
The Costs sub-index for the current month and 1M ahead were recorded at 50.2 and 49.9, respectively. Businesses generally expect higher operational costs in December 2024 than the previous month due to various factors, including year-end staff events, payment of employee bonuses, promotional activities, purchase of raw materials, and expenses related to annual equipment maintenance, as well as higher year-end shipping costs.
For January 2025, businesses expect operating costs to be lower than December 2024, mainly due to the return of back-to-normal operations and lower staff-related expenses.
In terms of economic sectors, only two out of 11 sectors expected optimistic business conditions in December 2024. The Transport 8 Communications sector reported the highest optimism, with an index of 50.7, driven by increased passenger travel and vehicle rentals during the peak holiday season and higher demand for shipping services.
The Manufacturing sector was slightly optimistic in December 2024 due to numerous events during the month, which brought in more demand and improved performance.
On the other hand, five sectors reported pessimism, especially the health and education sector at 49.2 due to the school holidays. Other pessimistic sectors were the other private services, finance and insurance, construction, and agriculture, forestry, fisheries and livestock, which cited concerns of relatively slower business conditions during the holiday season, Other factors shared were expectations of delays to projects and orders for some businesses, fewer or no projects, and poor weather conditions during the month. Meanwhile, the oil and gas related, wholesale and retail trade, real estate and ownership of dwellings, and hotel and restaurant sectors expected similar business conditions as November 2024.
In terms of businesses across four sizes – large, medium, small and micro all reported at the 50.0 level, which indicates that businesses generally had similar expectations in December 2024 compared to the previous month. However, survey results showed notable variations in sentiment at a sectoral level, where events such as the school holidays, peak travel season, and industry-specific challenges are major factors in shaping business sentiments.
For more information on the BSI, public members can refer to the technical notes on the methodology and statistics on the BDCB website.
