Brunei poised for continued economic growth in 2024

MARCH 23, 2024

Brunei Darussalam’s economy was forecast to record a positive performance with an estimated 2.7 per cent growth for 2024 for its second consecutive year, the Centre for Strategic and Policy Studies (CSPS) said in its latest publication Brunei Economic Outlook 2024.

The forecast – in line with the International Monetary Fund (IMF), the Asian Development Bank (ADB) and the ASEAN+3 Macroeconomic Research Office (AMRO) – projected that the non-oil and gas sector will continue its modest expansion into 2024 helping diversify the economy despite a forecasted contraction in services.

The largest expected contributor to gross domestic product (GDP) growth in 2024 remains the oil and gas sector, as well as the downstream segments as they revert to their growth trajectory after shrinking last year.

Recapping last year’s economic performance, the CSPS highlighted that the Sultanate’s economy grew by 1.4 per cent in 2023 after two consecutive years of contractions.

However, it was lower than the 2.6 per cent growth forecast in the Brunei Economic Outlook 2023 due to the first half of the year experiencing disruptions to domestic oil and gas production and a protracted slowdown in downstream activities.

The decline bottomed out in Q3 of 2023 with the completion of rejuvenation and maintenance activities, making GDP bounce back in Q4 with a strong growth of 6.8 per cent.

Significantly, the publication also stated that the non-oil and gas sector – including downstream activities – continued its expansion relative to the oil and gas sector in 2023, climbing to 53 per cent which is the largest relative difference observed in recent data. This reflects the structural transition that the economy is undergoing which is expected to increase further in the coming years.

Meanwhile, on the economy’s expenditure side, growth in household consumption accelerated further in 2023 but is starting to normalise. High global interest rates may further put a brake on household consumption as households find it more attractive to save rather than spend. Average 12-month bank deposit rates are already three times as high as their lows in 2022.

Investments marginally increased in 2023 and new downstream projects in 2024 could provide a boost. In particular, investments are likely to increase in 2024 as work commences on the Pulau Muara Besar (PMB) Phase 2 Development Project with Hengyi Industries.

Total trade fell in 2023 as both exports and imports decreased. The decline in exports was almost entirely due to lower exports of mineral fuels and chemicals, while the decline in imports was due to less mineral fuel imports, which are key inputs to the downstream industries.

Nevertheless, exports of mineral fuels picked up substantially in Q4 of 2023 and the trade and current account balance for the year remained in a healthy surplus.

On the unemployment rate, 2022 saw a slight increase to 5.2 per cent but remained below the pre-pandemic level of 6.8 per cent. This is a notable achievement especially in view that the unemployment rate was 9.0 per cent in 2017 and 7.3 in 2020.

The private sector continues to lead as the new source of jobs for both local and foreign workers, widening the gap since 2020, when the private sector first overtook the public sector as the main source of employment.

There is also an observable localisation of jobs as the number of foreign workers decreased by approximately 13,000 between 2019 (before the pandemic) and 2022, while employed locals increased by 6,000. Even after the reopening of borders, the localisation of jobs has continued.

In addition, the softening of global supply chain problems allowed for the decades-high inflation – a key policy concern in 2023 – to ease from 3.7 per cent in 2022 to 0.4 per cent in 2023.