Brunei Darussalam’s economy grew 4.2% in 2024, marking its strongest expansion in over two decades, as the country emerged from the pandemic with a strong rebound in both upstream and downstream oil and gas activity, according to the ASEAN+3 Macroeconomic Research Office (AMRO).
The upbeat preliminary assessment follows AMRO’s annual consultation with Brunei’s economic planners, held from April 17 to 23.
Growth is expected to moderate to 2.6% in 2025–26 as the pace of oil and gas recovery levels off. Nonetheless, near-term momentum is expected to be supported by gains in agri-food, tourism, and a steady services sector, particularly wholesale and retail trade, air transport, and communications.
“Brunei’s macroeconomic environment remains stable, with low inflation, strong external buffers, and a government focused on economic diversification,” said Anthony Tan, AMRO Deputy Group Head and Principal Economist.
Inflation turned negative in 2024 amid declining costs in transport, communication, and consumer goods, and is forecast to remain subdued, averaging below 1% in 2025–26.
The country’s external position remains robust, supported by a large current account surplus, though this is projected to narrow from 14.5% of GDP in 2024 to 12.4% in 2025 due to softer global energy prices and rising services imports.
However, fiscal pressures are mounting. The budget deficit is expected to widen to 12.5% of GDP in fiscal year 2024, driven by lower oil and gas revenues.
AMRO advised Brunei to adopt more prudent, rules-based fiscal management to bolster policy credibility and mitigate revenue volatility.
Key risks include global energy price fluctuations, potential oil and gas production disruptions, and slower growth among major trading partners. Longer-term challenges center on the pace of diversification and the global transition to a low-carbon economy.
AMRO also urged Brunei to strengthen financial stability by improving oversight of cross-border bank lending and adopting stronger risk management frameworks.
Advancing digital innovation, green investments, and MSME development were flagged as vital to reducing the economy’s reliance on hydrocarbons.
The mission concluded with a call for Brunei to deepen trade integration and broaden domestic capacity in non-oil sectors to ensure sustainable, inclusive growth in the years ahead.
Business News Asia