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Is Brunei Bouncing Back?
By Ignatius Stephen

Bandar Seri Begawan – Is Brunei on the bounce again? That is the question the public and the local business sectors are asking following recent rosy forecasts the government and some bankers are making currently.

Their optimism is centered on government’s prediction that the sultanate’s economy is expected to “bounce back” in the second quarter of the year. There was a slight contraction in the first quarter, according to Brunei Economic Bulletin.

The quarterly publication by the Economic Planning and Development Department, Prime Minister’s Office is optimistic that the growth trend seen in May to August this year may continue and help the “overall growth trend” of the nation’s economy.

“On its part, the government sector will continue to push for more National Development Plan projects to be implemented,” the publication added.

Some bankers here support this cheerful picture adding that there has been an upward trend in retail trade in recent months.

But local shop keepers continued to paint a bleak picture. This was especially so in the restaurant sector whereby a number have gone out of business in the capital.

The departure of large number of garment industry workers has not helped the situation.

And also a less sanguine mood is expressed on the oil and gas scene sounding a word of caution. The publication warns that expansion in the oil and gas sector production will remain modest in a situation of soaring oil price in the world market.

But the growing demand for energy in Brunei's major oil export destinations of China and India may help push production up to some extent.

The government finance earlier this year experienced another budget surplus which was largely contributed by the increasing oil price.

The surplus will enable the government to continue to accelerate further the implementation of the 8th National Development Plan projects during the second quarter of this year, the government bulletin said adding that the contribution of the government to the overall growth of the economy will be supported by these developments.

The non-oil private sector will continue to grow positively and this will be partially contributed by dynamism in the wholesale and retail trade, construction and transport and communication sectors.

These three sectors posted commendable growth rates in the previous quarter and will continue to grow further during second quarter of the year although the growth rates might be lower.

The positive development in the monetary sector during this quarter has also contributed growth in the second quarter. Monetary aggregates such as M1 and M2 have expanded to some extent and so are other variables such as banks' assets and liabilities and banks' loans. For the non-performing loans, there were further quarterly decline albeit at a slightly slower rate.

Brunei Darussalam recorded another trade surplus during Q1 2005 but this was contributed to a large extent by a drop in import of nearly all items. However, this seasonal decline may change as consumer demand and construction needs may increase again in Q2 2005 consistent with expected growth rates in the wholesale and retail trade, construction and transport and communication sectors.

The Consumer Price Index for the first quarter rose marginally and this is one of the indications of a growing consumer market. Similarly, advertisement for job vacancies showed laudable increments compared with the previous quarter's. These and other indicators discussed above will complement and provide the source for a growing economy in Q2 2005.

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