Brunei domestic economy shrinks 1.5 per cent first half 2021

Brunei’s domestic economy narrowed by 1.5 per cent year-on-year in the first half of 2021 due to the contraction in the Oil and Gas Sector, according to Brunei Darussalam Central Bank’s (BDCB) bi-annual policy statement.

In its Policy Statement 2/2021, the central bank stated that the inflation forecast for 2021 will remain in the range of 1 to 2 per cent.

The projection is in line with the global inflation forecast which is expected to rise modestly and the recent tightening of monetary policy by the Monetary Authority of Singapore.

BDCB noted that the global economy is expected to grow by 5.9 per cent in 2021, a downward revision in part due to supply disruptions in advanced economies and worsening pandemic situations in several emerging and developing economies.

The outlook to the global and regional economy is dependent on respective countries’ abilities to mitigate the impact of COVID-19, vaccination progress, and provision of adequate stimulus.

Moreover, BDCB also witnessed a notable growth in total assets of 7.5 per cent year-on-year in terms of the financial sector development.

Nonetheless, the overall risk level of the banking sector in Q3 2021 heightened slightly from Q2 2021 due to spillover effects of the second wave of coronavirus outbreak to the financial sector.

“Despite the ensuing impact from the COVID-19 outbreak, the capital position of the banking industry as of Q3 2021 remains robust, with an aggregate Capital Adequacy Ratio of 20.3 per cent,” it said.

Nevertheless, considering the heightened uncertainties associated with the COVID-19 pandemic as well as the low global interest rates environment, the profitability of the banking industry has also declined.

BDCB has taken appropriate measures, including the issuance of advisory letters to all licensed financial institutions in Brunei Darussalam and BDCB FinTech Regulatory Sandbox participants to strengthen the necessary steps in reducing the spread of the virus, and to ensure safe business operations.

In upholding public confidence, all financial institutions are also advised to ensure sufficient cash are available. Furthermore, temporary regulatory flexibility has been provided to banks and finance companies on loan/financing classification.

The full version of BDCB Policy Statement 1/2021 can be found at BDCB’s website at www.bdcb.gov.bn. For further information and enquiries, members of the public may contact BDCB by calling the BDCB hotline at 2388388, or by emailing info@bdcb.gov.bn. – Analisa Amu

Image: Shutterstock

This article was first published on 25 December 2021 in our Weekly E-Paper issue 173 | More stories here

THE BRUNEIAN | BANDAR SERI BEGAWAN

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