Strong growth in the downstream sector has offset major revenue losses in the airline industry as Brunei’s economy expanded 2.4 percent in the first quarter of 2020.
In its gross domestic product (GDP) report for Q1 2020, the Department of Economic Planning and Development stated that the air transport subsector plunged 21.8 percent following the grounding of some Royal Brunei (RB) Airlines flights amid the COVID-19 pandemic.
The national carrier began suspending flights to China in February when the early coronavirus outbreak took hold in the Chinese city of Wuhan.
RB airlines was dealt a further blow when the government banned inbound and outbound travel in March to curb the spread of COVID-19.
A vast majority of RB airlines flights have since been put on hold, operating just five routes in July and August out of its usual service of 29 destinations.
Suffering from a drop in occupancy rates, the hotel subsector also contracted four percent year-on-year in Q1.
The overall services sector fell 2.5 percent in Q1 after seeing positive growth last year.
A decrease in banking and insurance activities has also resulted in a 14.4 percent decline in the finance subsector.
However, there were bright spots in some services subsectors, including business services (7.7 percent), health services (6.3 percent) as well as wholesale and retail trade (4.1 percent).
The first quarter GDP growth was largely attributed to a 29.1 percent rise in export of goods and services.
The increase in export revenue came after Brunei-China joint venture Hengyi Industries started selling petrochemical products worth $1.22 billion to 15 countries.
Production of liquefied natural gas and other petrochemical products showed the largest growth among all sectors with a 32.2 per cent increase and $294.9 million in real gross value added (GVA).
In the oil and gas sector, crude oil production shrank 8.4 percent to 116,200 barrels per day, as opposed to 126,900 barrels a day in the same period last year.
The COVID-19 pandemic triggered an oil price crash in April with Brent Crude – the international benchmark for oil prices – falling to an 18-year low at US$19 per barrel.
As one of the countries in the OPEC Plus grouping, Brunei was considering cutting oil output to stabilise crude prices.
Reuters reported that Brent Crude was trading at US$43.52 a barrel on Thursday.
Brunei has also scaled back natural gas production with 34.8 million cubic metres a day in the first quarter of 2020 compared to 35.5 million cubic metres last year.
While the non-hydrocarbon sector posted a 10.9 percent growth in the first quarter, the oil and gas sector continued its dominance in the Brunei economy with a value of $2.4 billion.
