Brunei Economic Outlook
After GDP contracted year on year in Q4 2022 due to weaker energy output, the economy likely struggled further in Q1 2023. In January–March, merchandise exports shrank by over 20% year on year amid declining LNG output in the latter month. Volatility in oil prices and export volumes likely weighed further on government revenue and spending. Additionally, total FDI outflows more than doubled in Q1; the manufacturing sector saw the largest outflow of funds, while investment in the mining and quarrying sector strengthened through March. In Q2, economic activity likely continued to struggle. April saw merchandise exports decline nearly 60% year on year due to slumping mineral fuels volumes, although higher crude oil export volumes prevented a larger fall. Meanwhile, Brunei’s inclusion in the CPTPP trade agreement in July bodes well for the external sector and investment.
Brunei Inflation
Inflation rose to 0.5% in May (April: 0.2%) but remained below its pandemic peak of 1.6%. Average inflation should fall from current levels later this year on lower commodity prices, government subsidies and the currency’s linked exchange rate to the Singapore dollar. Stronger-than-expected domestic activity and the El Niño weather phenomenon pose upside risks.
This chart displays Economic Growth (GDP, annual variation in %) for Brunei from 2013 to 2022.