Bandar Seri Begawan - Brunei Darussalam's economy is expected to grow at a more modest pace in view of lower oil production in the first half of this year, the Asia Development Bank (ADB) stated in its Asian Development Outlook (ADO) 2012-update.
According to the report, the country's oil and gas sector, which accounts for two-thirds of nominal GDP, remained subdued in the first half of 2012, while the economy outside this sector, comprising mainly government services funded by oil revenue, contributed to modest GDP growth estimated at 0.8 per cent.
Production of oil and gas is expected to pick up, but in view of the lower production than expected between January and June, forecasts for full-year GDP growth were revised down to 1.5 per cent for 2012 and to 2.1 per cent for 2013.
The report previously estimated that GDP growth for the Sultanate would be 2.6 per cent this year and 3.2 per cent for the following year.
Brunei's GDP grew by 2.2 per cent in 2011, below the 2.9 per cent estimate in the ADO 2012. Growth slowed significantly in the fourth quarter, mainly owing to a decline in crude oil output.
ADB also stated that inflation in Brunei had subsided more rapidly than expected, to 0.3 per cent year on year in June, after an increase in excise tax drove inflation up in 2011. The inflation forecasts were lowered from those in the ADO 2012.
The value of merchandise exports rose by about 27 per cent in the first quarter of 2012, propelled by high prices for crude oil, liquefied natural gas and methanol:
Imports surged by 33 per cent, but the trade surplus nevertheless increased as the value of exports is more than four times that of imports.
Exports, together with income from investments abroad, are expected to underpin strong fiscal and current account positions during the forecast period.
According to the Quarterly Gross Domestic Product Report for Brunei, which was recently released by the Department of Economic Planning and Development (JPKE), Prime Minister's Office, in the second quarter of 2012, GDP for Brunei at current prices was estimated at B$4,776.4 million compared to B$5,364.4 million in the first quarter of 2012.
In terms of GDP growth at constant prices, the second quarter of 2012 recorded a growth of one per cent. This was mainly attributed to the growth of the non-oil and gas sector by 3.6 per cent. However, the oil and gas sector fell by two per cent.
The ADO report noted that growth in Southeast Asia was expected to quicken to over five per cent in 2012, mainly due to Thailand's recovery from severe flooding in 2011.
Higher levels of government spending have contributed to growth in Malaysia and the Philippines, while investment and private consumption in the subregion are generally buoyant with inflationary pressures abating.
ADB is significantly scaling back 2012 and 2013's growth forecasts for developing Asia, noting that after years of rapid growth, the region should "brace for a prolonged period of moderate expansion amidst an ongoing slump in global demand".
ADB projects the region's GDP growth dropping to 6.1 per cent in 2012 and 6.7 per cent in 2013, down significantly from 7.2 per cent in 2011.
The deceleration of the region's two giants, China and India, in tandem with the global slowdown, is also tempering earlier optimism.
The report notes that the ongoing sovereign debt crisis in the euro area and looming fiscal cliff in the US could have disastrous spillovers to the rest of the world, particularly developing Asia.--Courtesy of Borneo Bulletin