BANDAR SERI BEGAWAN, May 1 (Xinhua) -- The research arm of the Association of Southeast Asian Nations+3 (ASEAN+3) predicted that Brunei's economy will grow by around 2 percent in the next two years though the sultanate's high reliance on the oil and gas sector was seen as "major risk" to the economy.
Data from the 2019 ASEAN+3 Regional Economic Outlook released on Wednesday showed that Brunei's economy was expected to grow by 2.1 percent this year and 2.0 percent in 2020.
This was up from 0.1 percent in 2018, but the figures were the lowest in Southeast Asia, according to the report published by the ASEAN+3 Macroeconomic Research Office.
It said the growth in 2019 will be supported by stronger foreign direct investment inflows and Hengyi Industries Sdn Bhd's refinery production, which is slated to begin operations later this year.
Hengyi Industries is a joint venture between China's Zhejiang Hengyi Group Co. Ltd. and Damai Holdings - a wholly owned subsidiary under Brunei government's Strategic Development Capital Fund - owning 70 percent and 30 percent respectively.
On the other hand, domestic factors such as the high reliance on the oil and gas sector poses major risks to the economy.
"Following the price recovery since 2016, an unexpected shortfall in oil and LNG production in 2018 has affected economic growth. It will also hamper the government's ability to support the economy," it said.
It added that external risks, apart from the possibility of a sharp decline in global oil and gas prices, are expected to have less impact on Brunei's economy.
"Brunei is less susceptible to spillovers from the global trade conflicts given its relatively low engagement in the global value chain," it said.