ECONOMIC OVERVIEW

Brunei’s economic landscape is distinctly shaped by its abundant natural resources, particularly significant to oil and gas reserves. Emerging industries such as finance, tourism, and agriculture are becoming key focus areas for development. These are the economic overview examines the Brunei’s growth and the strategies for the economic stability and resilience.

KEY INDUSTRIES

One the major key industries which contribute to the Gross Domestic Product (“GDP”) for the Brunei are as follows:

Oil and Gas: The foundation of Brunei’s economy; oil and gas account has more than 90% of export earnings and a sizeable portion of GDP. One of Southeast Asia’s leading producers of natural gas and oil.

Manufacturing: The manufacturing sector comprises the manufacture of building materials and the processing of food, but it is still quite modest in comparison to the oil and gas industry.

Finance and Banking: The financial services sector in Brunei is growing and supported by a stable regulatory environment. The country aims to position itself as a financial hub in the region. Islamic banking is particularly prominent which reflects the nation’s cultural and religious values.

Construction and Real Estate: The construction industry has seen growth due to various infrastructure projects and urban development initiatives. This sector benefits from government spending on public works, housing, and commercial developments, contributing to job creation and economic diversification.

Information and Communication Technology (“ICT”): Brunei is investing in ICT to enhance its digital economy and improve the services across the various sectors. The government aims to foster innovation, support startups, and encourage the use of technology in business processes to drive efficiency and productivity.

Agriculture and Fisheries: The agriculture and fisheries are major contributors to GDP. The government is promoting sustainable practices and enhancing productivity in agriculture, with initiatives aimed at increasing local food production and reducing reliance on imports.

TRADE AND FINANCE

Most central banking functions are handled by the Ministry of Finance’s and Brunei Currency Board. The Brunei dollar is issued by the country’s currency board. Along with a few international and offshore banks, the nation is home to several Islamic commercial banks.

FISCAL DEFICIT

Fiscal balance recorded a deficit in Q1 2024 as government revenue declined, offsetting the fall in expenditure. The decline in government revenue corresponded with a fall in oil and gas revenue in line with lower prices of LNG. Other than that, the decline in returns from investment and savings and government operations (mainly taxes and fees, charges & rent) also contributed to the decline in government revenue. Meanwhile, the decrease in government expenditure was primarily due to a decrease in ordinary expenditure, which was primarily driven by a decline in Personnel Emoluments (PE) and other charges annual recurrent (OCAR) expenditure.

OBSERVATION

Brunei’s economy is heavily reliant on its oil and gas resources, which have provided substantial wealth and a high standard of living for its citizens. Brunei has reduced its dependency on hydrocarbons and has created a more balanced and robust economic future. The government’s proactive approach and commitment to development will be essential in emerging opportunities.