BANDAR SERI BEGAWAN – The Brunei economy shrank 1.4 percent in the final quarter of last year, ending its run of positive growth since Q1 2019.
The non-oil and gas sector’s continued strong performance was not enough to offset revenue losses in the energy sector, which extended its downward slide of 8.6 percent year-on-year.
The Department of Economic Planning and Statistics (DEPS) released its Q4 2020 GDP report on Thursday, a day after Second Minister of Finance and Economy YB Dato Seri Setia Dr Hj Mohd Amin Liew Abdullah said Brunei posted a 1.2 percent GDP growth last year.
The 2020 GDP represented a lower growth rate than the 13-year-high of 3.9 percent in 2019.
Brunei was still able to post a modest annual GDP growth due to major gains in the downstream sub-sector throughout 2020, despite the oil and gas sector struggling to recover from the coronavirus-induced collapse in energy prices.
In Q4, downstream activities – including production of petrochemicals — contributed to a 7.4 percent rise in the non-oil & gas sector with a gross value added of $362.5 million.
Since Hengyi started exporting petrochemical products in November 2019, downstream activities have been the largest driver of economic growth with a 32.2 per cent increase in Q1 and skyrocketed 481 percent in Q2.
Energy sector still struggling to recover
There was more bad news in the oil and gas sector as scaled-down production resulted in negative growth in all four quarters of 2020.
Crude oil output declined from 122,700 barrels per day in Q4 2019 to 105,100 barrels per day in Q4 2020, while natural gas production decreased to 32.5 million cubic metres per day in Q4 2020 from 34.5 million cubic metre per day in the preceding year.
LNG production also fell to 901,100 British thermal unit per day (MMBtu/d) in Q4 2020, compared to 982,000 million MMBtu/d in the previous year.
Brunei had agreed to cut oil production last April as part of the OPEC Plus grouping’s plan to stabilise prices following an oil price crash triggered by the pandemic.
While oil prices have shown signs of picking up, it is still far below pre-pandemic levels.
DEPS said the average oil price declined 37.8 per cent from US$69.48 per barrel in Q4 2019 to US$43.23 per barrel in Q4 2020.
Exports of goods and services also contracted 10.2 per cent in Q4 2020.
Air transport reports more losses
The COVID-19 pandemic continued to hurt the air transport sector, plunging 83.6 percent in the fourth quarter of last year.
Earlier in Q3, the air transport sector had slumped 92.1 percent year-on-year as travel restrictions coupled with suspension of a vast majority of Royal Brunei Airlines flights took a toll on the aviation industry.
All transport services – including land and water transport – recorded large losses, further contributing to the overall 3 percent negative growth of the services sector in Q4 2020.
Other services in negative territory included education (9.1%), business services (6.5%), hotels (4.8%), finance (3.2%), government services (2.4%), and communication (0.9%).
Health services had the largest growth in the services sector with 9.8 per cent, while the wholesale and retail sub-sector also expanded 7.5 per cent in Q4.
Elsewhere in the agriculture sector, the poultry and livestock sub-sector gained 24 percent and aquaculture activities have also increased 47.4 percent.