| Azlan Othman |
BRUNEI Darussalam’s gross domestic product (GDP) growth is expected to pick up to one per cent in 2018 reflecting higher oil output and shoot drastically to eight per cent next year, the International Monetary Fund (IMF) said in its latest Regional Economic Outlook for Asia and the Pacific.
This is in contrast with the Fund’s outlook released in October 2017 which projected a lesser GDP growth for this year at 0.6 per cent. Brunei’s growth recovered to 0.5 per cent in 2017, turning positive for the first time since 2012, mainly driven by the non-oil-and-gas sector, IMF said.
No details were given by the Fund to back such an increase in GDP growth next year for Brunei, one of the region’s fast growing economies.
But IMF in its report last year had noted that over the medium term, the growth outlook of the Sultanate will further improve with the start of downstream production from new energy facilities, a new gas field and public investment under the next five-year development plan. According to IMF, these are projected to result in robust GDP and export growth during 2019-2022.
In its latest Economic Outlook for Asia and the Pacific, IMF said that in China, growth is expected to moderate to 6.6 per cent in 2018 – 0.1 percentage point higher than expected in October – as financial, housing and fiscal tightening measures take effect. Hong Kong economy’s growth is expected to remain strong at about 3.6 per cent in 2018.
In Japan, growth has been above potential for eight consecutive quarters and is expected to remain strong at 1.2 per cent this year. In India, growth is forecast to rebound to 7.4 per cent in fiscal year 2018-19 as the economy recovers from disruptions related to the currency exchange initiative and the rollout of the new Goods and Services Tax.
India’s growth is projected to pick up further to 7.8 per cent in 2019, and the country will remain one of the region’s fastest-growing economies, pipped only by Brunei Darussalam.
“The region remains strong and continues to be the most dynamic of the global economy. Near-term prospects have improved since the Regional Economic Outlook Update for Asia and Pacific in October 2017, and risks around the forecast are broadly balanced for now,” the Fund said.
Over the medium term, however, downside risks dominate, including from a tightening of global financial conditions, a shift towards protectionist policies and an increase in geopolitical tensions. Growth in Asia is forecast at 5.6 per cent in 2018 and 2019, while inflation is projected to be subdued. Strong and broad-based global growth and trade, reinforced by the US fiscal stimulus, are expected to support Asia’s exports and investment, while accommodative financial conditions should support domestic demand.
Risks around the outlook are balanced for now but tilted to the downside over the medium term. On the upside, the global recovery could again prove stronger than expected, and over time, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and successful implementation of the Belt and Road Initiative, assuming debt sustainability and project quality are maintained, could both support trade, investment and growth.
On the downside, Asia remains vulnerable to a sudden and sharp tightening of global financial conditions, while too long a period of easy conditions risks a further build-up of leverage and financial vulnerabilities.
Two weeks ago, a report released by the ASEAN+3 Macroeconomic Research Office (AMRO) in Manila, the Philippines rated Brunei as one of the improving economies in the Association of Southeast Asian Nations (ASEAN) region in the next two years, along with Indonesia, Laos, Myanmar and the Philippines.
Revealing the regional economic outlook for the region, AMRO’s ‘ASEAN+3 Regional Economic Outlook (AERO) 2018’ report said that the Sultanate is projected to post the strongest gross domestic product growth, which almost tripled from 0.6 per cent in 2017 to 1.6 per cent in 2018 and is expected to double to 3.4 per cent in 2019.
Last month, Asian Development Bank (ADB) said the Sultanate’s economy will grow at 1.5 per cent this year and further to two per cent next year, citing rise in global oil prices and strengthening of major industrial economies.
It said with a rise in global oil prices, the economy seems to have posted marginally positive growth in 2017, for the first time in five years. Growth should strengthen 1.5 per cent this year and two per cent next year. Inflation is likely to edge up but continue to be low and the current account will continue to post substantial though narrowing surpluses. Enhancing domestic competition is key to diversifying the economy.
The Manila-based bank further said in its 2018 Asian Development Outlook (ADO) that the Sultanate’s GDP is estimated to have grown by 0.8 per cent in 2017, following four years of economic contraction. Last year’s turnaround to marginal growth was underpinned by increased government consumption and a recovery in fixed investment, it noted.
And recently, the Department of Economic Planning and Development (JPKE) said Brunei’s economy grew by 1.3 per cent in 2017 after a 2.5 per cent decline in 2016. The overall growth was achieved after the GDP in the fourth quarter (Q4) of 2017 expanded by 5.2 per cent year-on-year (y-o-y).
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