BANDAR SERI BEGAWAN – Brunei posted a slower economic growth of 0.5 percent in the third quarter of 2020 even as the downstream sub-sector maintained its strong momentum, data from the Department of Economic Planning and Statistics (DEPS) showed.
Brunei’s economic growth mostly relied on revenue from petrochemical activities to stay in the positive territory, according to the Q3 gross domestic product (GDP) report published on Monday.
Earnings from petrochemical products contributed to the eight percent growth of the non-oil and gas sector with a gross value added of $208.9 million.
Since Hengyi Industries started its operations in November 2019, the downstream sub-sector has been the main driver of the country’s economic growth as the hydrocarbon sector’s dominance in the Brunei economy starts to wane.
Despite the impact of COVID-19 pandemic, Brunei remained on track to end the year 2020 with the projected growth of one to two percent after the economy expanded 2.4 percent and 2.8 percent in Q1 and Q2, respectively.
Energy sector contracts 5.7%
The sluggish oil and gas sector was one of the major causes behind the slower economic growth in the third quarter, declining 5.7 percent.
DEPS attributed the contraction to lower crude oil and natural gas output.
Crude oil production decreased to 100,500 barrels per day in Q3 2020 compared to 113,300 barrels per day in the preceding year.
Last April, Brunei had agreed to cut oil production as part of the OPEC Plus grouping’s plan to stabilise prices following an oil price crash triggered by the pandemic.
However, lacklustre demand continued to affect the average oil price, which fell 32.9 percent to US$44.6 per barrel in the third quarter year-on-year.
Natural gas production was also scaled back from 31 million cubic metres a day in Q3 2019 to 30.6 million cubic metres in Q3 2020.
Moreover, liquefied natural gas (LNG) manufacturing shrunk to 833,570 million British thermal unit a day in Q3 2020, as opposed to 843,990 million MBTU in the previous year.
Downward trend continues for aviation sector
The majority of sub-sectors in the services sector registered negative growth in the third quarter, continuing the downward trend from Q2 but is showing signs of easing after the government lifted COVID-19 restrictions.
Quick recovery is not in sight for the aviation sub-sector as it once again reported a sharp fall of 92.1 percent year-on-year.
Earlier in Q2, the air transport sector had slumped 93.1 percent, owing to Royal Brunei Airlines’ suspension of 90 percent of its flights due to the pandemic.
Other sub-sectors in negative territory were land transport (17%), hotels (12.3%), restaurants (8%) and finance (4.4%), which contributed to the 0.3 percent decrease in the overall services sector in Q3.
The services sector has not reported positive growth since Q4 2019.
Meanwhile, the agriculture, forestry and fishery sector had the largest growth out of all economic sectors with a 15.6 percent rise in the third quarter.
The increase was attributed to the 7.8 percent rise in livestock and poultry production, while fishery output climbed 59.1 percent.
DEPS further reported growth in export and import of goods and services, expanding 0.3 percent and 26.1 percent, respectively.