Outlook for 2011-12

Brunei will remain an autocratic state in 2011-12, with power concentrated in the hands of the sultan, Hassanal Bolkiah Mu'izzaddin. The token meetings of the largely appointed Legislative Council for a few days each year will continue, but the sultan is unlikely to fulfil his pledges to allow limited democratisation. The ageing of Brunei's oil- and gasfields mean that economic expansion will remain weak in 2011-12, but unimpressive headline growth figures will mean little, as high oil prices will keep the sultanate flush with cash and able to support the shift of the economy towards the non-energy sector.

The political scene

There have been no notable developments in Bruneian politics. The political scene is dominated by speeches by the monarch, and on the occasion of the country's 27th National Day he delivered an unremarkable annual speech. In Brunei's international politics, the country remains active in peacekeeping missions in the Philippines and Lebanon, leveraging its image as a stable and moderate Muslim country.

Economic policy

The Monetary Authority of Brunei Darussalam was inaugurated on January 1st 2011. Among other responsibilities, the new body will be in charge of monetary policy, although the pegged exchange rate, whereby the Bruneian dollar is pegged to the Singaporean dollar, gives Brunei little leeway for action on monetary policy. The government denied that the new body was being set up in advance of moves to scrap the pegged exchange rate. Possibly a more visible function of the new authority will be to regulate the banking sector, in line with international attempts to improve financial regulation.

The domestic economy

Brunei has not published any GDP data for 2010, but the economy is likely to have staged a modest rebound, following a contraction of 1.8% in 2009. Higher energy prices in 2010 relative to 2009 will have improved the budget and trade surpluses. A natural gas contract with a Japanese power company is coming up for renewal soon, amid signs that increases in supply elsewhere will weaken Brunei's hand in the negotiations. Brunei has appointed a representative company in Australasia to promote tourism.

Foreign trade and payments

Trade data releases were not forthcoming in the fourth quarter of 2010, but there is little likelihood of a change in Brunei's foreign trade pattern. Its exports consist largely of oil and gas, under long-term contracts with Japan and South Korea, and the country is reliant for imports on the South-east Asia region.