BANDAR SERI BEGAWAN– The Asian Development Bank (ADB) projected Brunei’s economic growth at 3.5 percent next year, compared to three percent predicted earlier.
The Asian Development Outlook (ADO) 2021 published yesterday, also stated that, Brunei’s economic growth is trimmed to 1.8 percent in the latest ADB update of its flagship economic publication, down from their earlier forecast of 2.5 percent in Apr, this year.
ADB, in its latest report, said Brunei’s growth in the first quarter (Q1) of 2021 contracted by 1.4 percent year-on-year, on declines in government consumption, investments, and exports that more than offset the growth in private consumption.
Exports of goods and services decreased by 4.3 percent by volume, primarily on plunging sales of mineral fuels. Government consumption fell by 9.8 percent, as measures to contain the COVID-19 outbreak affected some government services. Investment fell by 5.7 percent, with declines in both private and government capital spending.
The contraction in Q1 growth was mainly driven by lower oil and gas production (down 3.1 percent) and manufacturing of natural gas (down 11.4 percent). Services output recovered slightly. This was a broad recovery, however, spanning wholesale and retail trade, restaurants, business services, information and communication, as well as, real estate and personal services. The recovery in services is an indication that the effects of COVID-19 on the economy are receding.
Even so, output in several other sectors declined, particularly transport, government services, and hotels. Because of weaker-than-expected gross domestic product (GDP) growth in Q1, the update revises down its forecast for growth for the full year from the projection in ADO 2021.
The forecast for 2022 is higher, due largely to an expected rise in production and investment at Hengyi Industries’ refinery project, and in state-owned Brunei Fertiliser Industries’ ammonia and urea production plant. The inflation rate in the second quarter (Q2) was at 1.3 percent, lower than the peak of 2.5 percent in June, 2020.
All components of the consumer price index (CPI), except for transport and restaurants and hotels, rose at a softer pace. Inflation is expected to continue moderating in the near term, due to the large output gap. Although exports were slightly down in the first four months of this year, it recovered in May and June to post growth of 33.6 percent in the first half of 2021. They are expected to continue to rise over the rest of 2021.
ADB said, higher global oil and liquefied natural gas prices this year and next, compared with their levels in 2020, will support growth in goods exports. As exports pick up, imports will also rise – their value was up 169.8 percent from Jan to June – on the anticipated strengthening of domestic demand and inputs, such as mineral fuels for Hengyi’s refinery.
The net result of all this will be a lower current account surplus this year than was forecast in ADO 2021, but the surplus will still be higher than 2020’s.
Source: NAM NEWS NETWORK