SINGAPORE, July 29, 2026 – Higher global oil and LNG prices are expected to support Brunei Darussalam’s economic outlook through stronger export earnings and fiscal revenues. This improved near-term outlook should be used to rebuild fiscal buffers. Continued progress on economic diversification remains important to reduce reliance on hydrocarbons and increase long-term resilience.
This assessment follows AMRO’s Annual Consultation Visit to Brunei Darussalam from June 10–18, 2026. The mission was led by Group Head and Lead Economist Ravi Balakrishnan. AMRO Director/CEO Yasuto Watanabe and Chief Economist Dong He also participated in policy discussions with the authorities.
Recent developments and outlook
Following a sharp growth slowdown to 0.7 percent in 2025, GDP growth is projected to strengthen to 2.3 percent in 20261, supported by spillovers from elevated oil and LNG prices.
“A sustained increase in global energy prices provides Brunei with an opportunity to preserve fiscal buffers and strengthen its economic resilience against future shocks,” said Balakrishnan.
“At the same time, sustained reforms will be important to achieve the transformation goals under Wawasan 2035 and develop a more diversified economy,” he added.
Inflation is projected to rise to 1.3 percent in 2026, as higher global shipping and logistics costs pass through to domestic prices. Nevertheless, inflationary pressures are expected to remain contained, supported by exchange rate stability and continued subsidies and administered price controls on essential items.
Brunei’s external position remains a key source of resilience. The current account surplus rose to 18.0 percent of GDP in 2025 and is projected to widen further to 23.7 percent of GDP in 2026, reflecting elevated global energy prices. Foreign direct investment continues to be concentrated in downstream petrochemical activities and there are ongoing efforts to attract investment into other priority sectors. International reserves remain well above conventional adequacy metrics.
The banking sector remains sound, supported by sizable capital buffers, sustained profitability, and improving asset quality.
The fiscal deficit widened to 17.9 percent of GDP in FY2025 as lower hydrocarbon prices dampened government revenues. The fiscal balance is expected to improve in FY2026, supported by higher energy prices, although increased subsidy spending is likely to moderate the magnitude of the improvement.
Risks, vulnerabilities, and challenges
As a large net energy exporter, Brunei is benefiting from higher global oil and LNG prices. However, the economy remains exposed to abrupt price corrections and fluctuations in global energy demand.
Aging infrastructure and maturing hydrocarbon fields increase the risk of unplanned production outages. Accordingly, Brunei continues to invest in asset rejuvenation and operational improvements to support sustainable production. Disruptions to global shipping and supply chains could also raise domestic costs and add to fiscal pressures.
Over the longer term, sustaining momentum in economic diversification remains necessary. Although non-oil and gas exports have expanded significantly in recent years, growth has been concentrated largely in downstream petrochemical activities. Diversifying into higher value-added services, agri-food industries, digital sectors, and clean energy will be critical to reducing reliance on hydrocarbons and strengthening long-term growth prospects.
Policy recommendations
The recent increase in global energy prices presents an opportunity to increase fiscal buffers through prudent management of additional revenues.
Fiscal policy should focus on rationalizing current expenditure to support medium-term development priorities. Key measures include better targeting of subsidies, continued efforts to contain public sector wage pressures, and improvements in the execution of development spending. Broadening the domestic revenue base would also help reduce reliance on volatile hydrocarbon revenues.
Expanding the coverage and transparency of fiscal data would enable a more comprehensive assessment of the fiscal position. Over time, a robust medium-term fiscal framework will be essential to preserving fiscal sustainability and safeguarding intergenerational equity.
Monetary and financial sector policies should continue to strengthen liquidity management, improve monetary policy transmission, and enhance oversight of risks associated with banks’ growing offshore exposures. Continued efforts to strengthen cybersecurity frameworks and promote sustainable finance would further reinforce financial resilience and support the green transition.
Structural policies should focus on creating a more conducive environment for diversification by addressing constraints to business activity and workforce development. Priorities include simplifying trade procedures, streamlining project approvals, upgrading workforce skills, strengthening the priority sectors, deepening digital financial inclusion, and expanding clean energy production.
The AMRO team would like to express its appreciation to the Brunei authorities and participating organizations for their valuable insights and candid discussions during the mission.
1The 2026 growth and inflation forecasts presented in this press release are based on the information available during AMRO’s Annual Consultation Visit to Brunei Darussalam in June 2026. Updated forecasts are available in the July 2026 Quarterly Update of the ASEAN+3 Regional Economic Outlook (AREO).
About AMRO
AMRO is an international organization established to support macroeconomic resilience and financial stability in the ASEAN+3 region, comprising members of the Association of Southeast Asian Nations (ASEAN) and China; Hong Kong, China; Japan; and Korea. AMRO’s mandate is to conduct macroeconomic surveillance, support regional financial arrangements, and provide technical assistance to members. AMRO also serves as a regional knowledge hub and provides support to ASEAN+3 financial cooperation.