Brunei Darussalam: Economic Outline

Economic Indicators

The Sultanate of Brunei is the third-largest oil producer in Asia and the fourth-largest exporter of liquefied natural gas. Crude oil and natural gas production account for over 50% of the country's GDP and virtually all of its exports, thus Brunei is dependent on global hydrocarbon prices. In 2022, the real GDP experienced a contraction (-1.6%) primarily due to a decline in oil and gas (O&G) production. However, this was partially mitigated by growth in downstream O&G activities and non-O&G sectors. In 2023, growth was estimated to be negative by approximately 1%, primarily attributed to reduced hydrocarbons production, mainly due to the deferment of infrastructure maintenance in the O&G sector. However, the ongoing recovery in the non-O&G sector continued to make positive contributions, supporting diversification efforts. The IMF expects GDP growth to return into positive territory this year (3.5%) and in 2025 (2.8%).

Concerning public finances, the fiscal position saw a remarkable turnaround, shifting to a surplus of 1.6% of GDP in FY2022/23, compared to a deficit of 5.1% in FY2021/22. This improvement was driven by windfall revenues from higher global energy prices, compensating for the decline in oil and gas volumes due to production disruptions. Moreover, the winding down of COVID-19 pandemic spending resulted in savings of approximately 3% of GDP. Additionally, the non-oil and gas balance, excluding revenue and royalty payments, narrowed by 5 percentage points of GDP. The overall fiscal deficit is expected to widen in FY 2023/24. According to the IMF, decreased O&G revenues coupled with increased capital expenditure would result in an overall fiscal deficit of 9.2% of GDP in FY 2023/24. Total revenue is projected to decline to 19.5% of GDP, reflecting prolonged O&G infrastructure maintenance and softer commodity prices. Meanwhile, total expenditures would rise to 28.7% of GDP, driven by expanded capital spending aimed at supporting the recovery. The public debt-to-GDP ratio is almost null (2.3% in 2023). Average headline inflation more than doubled, surging from 1.7% in 2021 to 3.7% in 2022. This jump was driven by higher food prices, supply chain disruptions, and increased transport costs, including higher airfares. However, inflation moderated to 1.7% on average in 2023 (IMF).

The Sultanate of Brunei has one of the highest per capita GDP rates in Asia (USD 69,297 PPP in 2022, according to World Bank estimates), with an unemployment rate of 4.3% as of 2023. Citizens pay no taxes and the Government guarantees free medical services and education up to university level and give housing and rice subsidies. The country has no official measurement of a poverty line, but UN reports indicate that around 5% of the population is impoverished. In 2024, policies are focusing on diversifying the economy from oil and gas. The success of the Hengyi petrochemicals plant will represent progress, but Brunei’s fortunes will remain linked to global oil and gas prices.

Monetary Indicators	2016	2017	2018	2019	2020
Brunei Dollar (BND) - Average Annual Exchange Rate For 1 GHS	0.35	0.32	0.29	0.27	0.25

Source: World Bank - Latest available data.

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Latest Update: May 2024