Higher global energy prices have boosted Brunei Darussalam’s near-term economic outlook. The surge in crude oil and liquefied natural gas (LNG) prices following the outbreak of the Middle East conflict this year has boosted export earnings, improved public finances, and supported activity across the oil and gas (O&G) value chain.
This windfall offers Brunei a valuable opportunity to rebuild its fiscal buffers and invest in a more resilient and diversified economy, advancing the structural transformation envisaged under Wawasan Brunei 2035.
According to AMRO’s 2026 report on Brunei, growth is projected to rebound from 1.0 percent in 2025 to 1.9 percent in 2026, supported in part by higher energy revenues. Stronger O&G revenues are expected to narrow the fiscal deficit, while higher export earnings could widen the current account surplus to almost 20 percent of GDP. Over the medium term, growth is projected to average 1.8–2.0 percent as diversification progresses at a measured pace.
Yet the improved near-term outlook should not obscure Brunei’s enduring structural challenge. Hydrocarbon dependence generates substantial gains when energy prices rise, but also exposes the economy to abrupt price corrections and disruptions to domestic O&G production. An example of the latter is the negative impact of scheduled maintenance on crude oil activity, and the overall GDP outturn, during the second quarter of the year.
Brunei enters this period with considerable strengths: high income levels, substantial sovereign assets, and a strong external position. However, energy markets remain volatile, while the global transition toward cleaner energy sources could gradually weaken demand for fossil fuels. This would weigh on Brunei’s O&G export revenues and erode fiscal and external buffers over time.
Brunei has already made notable progress in diversifying its economic base. Non-O&G exports rose from 11 percent of total exports in 2017 to more than 60 percent in 2025. This is an important achievement, although it largely reflects the expansion of downstream petrochemical activities. The next phase of diversification will need to extend beyond downstream hydrocarbons and generate a broader range of productive opportunities for local firms and the Bruneian workforce.
Three priorities stand out.
Use the windfall to strengthen fiscal buffers
First, Brunei should use the current period of higher revenues to strengthen fiscal buffers. Continued fiscal prudence and further reforms would help translate a temporary revenue boost into lasting fiscal sustainability.
Gradually rationalizing current expenditure would create more room for investment in development priorities. Better-targeted subsidies and measures to contain the growth in the public sector wage bill improve spending efficiency while preserving support for those who need it most. Broadening the domestic revenue base, including by laying the groundwork for a broad-based consumption tax, would also help reduce reliance on volatile hydrocarbon receipts.
Improve development project management and delivery
Second, Brunei has a significant pipeline of development projects under its Twelfth National Development Plan (RKN12). The challenge is to turn these plans into well-designed, economically viable projects that raise productivity and support diversification.
Development spending has remained persistently below budget, reflecting capacity and implementation constraints. Of the 305 projects under RKN12, 91 remained in the design phase, underscoring the difficulty of moving efficiently from planning to implementation.
Improving project selection, preparation, and delivery is therefore critical. Projects should be prioritized according to their readiness, economic impact, and alignment with Brunei’s development strategy. Streamlining approvals, strengthening inter-agency coordination, and reducing implementation delays would help public investment deliver lasting economic benefits.
Promote private sector dynamism
Third, sustained diversification will require a more dynamic private sector. Simpler import and export procedures, faster project approvals, and better access to finance would lower barriers to investment and improve the operating environment for firms. Further progress on digital financial inclusion could widen access to financial services, particularly for smaller enterprises.
Addressing skills mismatches and making private sector employment more attractive will be equally important. Together, these measures would help firms invest and expand in priority areas, including agri-food, tourism, ICT, and services, while reducing the economy’s dependence on hydrocarbon-related activity.
A window of opportunity
Brunei’s energy windfall has created more favorable economic conditions, but the need for structural reform remains. The priority is to turn today’s gains into lasting resilience by building buffers, improving public investment, and enabling private sector growth.
Seizing this moment would help Brunei sustain the benefits beyond the current energy cycle and advance toward the more diversified and sustainable economy envisaged under Wawasan Brunei 2035.
'/%3E%3C/svg%3E){kind=small}
