THE ASIAN Development Bank (ADB) has lowered |its 2016 growth forecast for Brunei Darussalam along with Myanmar and Singapore in a supplement to its Asian Development Outlook 2016 report.
In the Outlook 2016 report released in March, Brunei’s gross domestic product (GDP) was forecast to edge up by 1 per cent this year and accelerate to 2.5 per cent in 2017 if global demand and prices for hydrocarbons start to recover.
The Sultanate’s economy was projected to return to growth this year on the assumption that oil and gas production continues to recover gradually as new technology extracts more oil from existing fields and that the government maintains significant investment in infrastructure, the report said.
According to ADB, construction will contribute to Brunei’s growth. The US$100-million (Bt3.6 billion) Sungai Kebun Bridge is to be completed this year, and construction of a bridge to Pulau Muara Besar, an island in Brunei Bay to |be developed as an industrial hub, is expected to run through 2018.
Work has started on the $1.1-billion Temburong Bridge to connect the Brunei-Muara District with Temburong District, the report added. However no GDP growth figures are available for Brunei in the report.
The report added that site preparation and dredging is under way for a $2.5-billion oil refinery and aromatics cracker project at Pulau Muara Besar.
This project, planned by a company from the People’s Republic of China, has been delayed, but construction could start during the forecast period. Commercial production is scheduled from 2019.
The impact that low oil and gas prices have on government revenue indicates that spending on public services and smaller capital projects will remain constrained.
The FY2016 budget cut total spending by 12.5 per cent from the previous year’s budget. Revenue is projected to fall further, and the budget is expected to post another deep deficit in FY2016, the report noted.
The budget puts a higher priority on spending that stimulates the economy such as infrastructure construction and maintenance and the development of small and medium-sized enterprises.
Buffer against declines
Accumulated financial assets provide a buffer against declines in revenue, it added.
In the ADB supplement report published on Wednes-day, growth forecast for Southeast Asia remains unchanged at 4.5 per cent in 2016 and 4.6 per cent in 2017, with Malaysia and the Philippines expecting stronger growth due to a surge in domestic consumption and public and private investment.
Singapore’s growth forecast was revised downwards to 1.6 per cent from its previous |projection of 1.8 per cent.
The revised forecast is still more optimistic than Singapore’s official projection of between one and 1.5 per cent growth this year.
The ADB’s growth forecast for Singapore next year remains unchanged at two per cent.