Despite the global economic impact of the coronavirus pandemic, the Second Minister of Finance and Economy assured the public that the sultanate’s economy may see a “respectable growth” this year, as the country’s business sectors continue to operate amidst the crisis.
This was said by Yang Berhormat Dato Seri Setia Dr Hj Mohd Amin Liew Abdullah who is also Minister at the Prime Minister’s Office during a press conference on Tuesday.
It was in response to a question posed by the media regarding the International Monetary Fund’s (IMF) latest report, which forecasted a 1.3 per cent GDP growth for Brunei this year, compared to the previous 4.7 per cent reported in January.
The minister pointed out that the IMF had projected that the global economic growth this year would fall to -3 per cent due to the rapidly developing coronavirus situation worldwide, which has been termed as “The Great Lockdown”.
The global economic impact of The Great Lockdown has even been considered to be “far worse” than the 2008-09 financial crisis.
“During the 2008-09 financial crisis, the global economic growth dropped by -0.1 percent and today with COVID-19, it’s projected to drop to -3 per cent,” said the minister, noting that these figures reflect the serious economical impact of the global pandemic.
“Brunei is no exception, we will also be affected,” he added.
However, according to YB Dato Dr Hj Mohd Amin, the sultanate may actually be seeing a respectable growth in its economy this year, having gone through an economic growth of 3.9 per cent last year.
“It was the strongest growth in our economy for the last 13 years (because) not only are we seeing the growth of our oil and gas sector, we are also seeing positive growth in the non-oil and gas sectors,” he explained.
“IMF may have forecasted our growth this year at 1.3 per cent, but we have also done our own internal assessment (of Brunei’s economic situation amidst COVID-19),” he continued, adding that this in part due to the fact that most of the country’s business sectors are still in operation.
“With the exception of some businesses in the tourism sector, many of us still continue to go to the office and work, we are quite lucky in that respect compared to other countries,” added the minister.
YB Dato Dr Hj Mohd Amin then assured that with the steady growth of both the nation’s the oil and gas and the non-oil and gas sectors in recent years, “we will still be able to achieve a respectable growth (for our economy in 2020)”.
Brunei will still continue to produce crude oil
During the press conference, YB Dato Dr Hj Mohd Amin proceeded to address concerns whether the plunging oil prices of the West Texas Intermediate (WTI) Crude, the benchmark for the United States, that was reported on Monday would affect the sultanate’s crude oil production.
According to Reuters, WTI Crude turned negative for the first time ever on Monday, reaching a low of minus US$40.32 per barrel, due to plummeting oil demands as national lockdowns continue.
“It looks like COVID-19 has affected the demand (for oil) seriously, especially in the United States, and of course it has implications for other benchmarks,” said the minister.
While WTI dropped below zero, Brent Crude however, the global benchmark for crude oil prices as of Tuesday remained in the US$20 per barrel range, with the minister assuring the public that Brunei will still continue its oil production.
“I think this is the time when you really need to make sure you have a diversified portfolio of buyers,” he continued, adding that most of the sultanate’s buyers are from the Asia-Pacific region, with some buyers from the North Asian countries.
“So we are able to continue to sell our cargo (however) the question is not whether you can sell, but at what price?,” he added.
YB Dato Dr Hj Mohd Amin said that what happened overnight with the WTI benchmark was a true reflection of the demand and supply situation of crude oil today as oil demands are cut significantly.
“Countries are in lockdown mode and factories are no longer operational, this does affect the demand in crude oil.
“Of course we have read the Organization of the Petroleum Exporting Countries (OPEC) and OPEC Plus members reducing their production significantly about a week ago, but despite that, it is still not enough,” he said.
The minister went on to conclude that Brunei’s oil production will not be severely affected by the sudden shift of the world’s economic landscape due to the coronavirus but nevertheless, “We just have to follow the price of the current market environment”.
The Bruneian | BANDAR SERI BEGAWAN