BANDAR SERI BEGAWAN, Nov. 29 (Xinhua) -- Brunei's economy is expected to see a modest recovery in 2017 with a small positive growth led by improvement in oil and gas production and expansion in investment, according to the preliminary assessment by the ASEAN+3 Macroeconomic Research Office (AMRO) after its annual consultation visit to the sultanate.
The recovery also comes as infrastructure and Foreign Direct Investment (FDI) construction projects are progressing.
According to local media on Wednesday, the mission from Oct. 30 to Nov. 3 was led by Seung Hyun Hong, AMRO lead specialist and participated by Hoe Ee Khor, AMRO chief economist. Discussions focussed on growth prospects, structural vulnerabilities and policy developments, particularly those related to economic diversification.
"Brunei's economy is recovering at 0.4 percent in 2017 after a prolonged period of negative growth," said Hong. "Fiscal policy should be supportive, especially of the intensified government efforts to diversify the economy which have led to a significant improvement in business environment and progress in attracting FDI projects."
After four years of contractions, Brunei's economy has rebounded slightly in 2017 on the back of a recovery in oil and gas production and private investment. Gross Domestic Product (GDP) growth has been improving slowly and turned positive in second quarter 2017. This favorable growth momentum is expected to continue in 2018.
The fiscal position is expected to improve markedly in 2017 resulting from reforms undertaken by authorities to ensure the long term fiscal sustainability and the recent recovery in energy prices.
Continued efforts to enhance spending efficiency and to carefully rebalance public resource allocation will be crucial to strengthen fiscal support for sustainable economic growth and the diversification progress. Efforts to diversify revenue sources will also be important to reduce high reliance in oil and gas revenue.
Brunei's trade balance remains in surplus, but narrowing as major infrastructures and FDI construction projects are progressing. Going forward, exports are projected to rise with the modest recovery in oil production and prices while imports will see a boost with the implementation of some mega projects.
The financial sector remains well-capitalized with ample liquidity. Credit growth slowed down in recent quarters, reflecting sluggish economic activities, but should improve going forward.
