“Resilience of Bruneian economy amidst Covid-19 based on the United Nations Disaster Risk Reduction (UNDRR) framework”

The outbreak of Covid-19 is the second most devastating event over a century. The pandemic, alongside deep health crises, has ushered the largest economic shocks, which require governments’ attention to ameliorate to avoid an economic downturn. The aim of this study is to measure the economic impacts of Covid-19 in Brunei by estimating the exposure, vulnerability, and resilience of the economy. This study deployed the United Nations Disaster Risk Reduction framework to examine the economic impact empirically. The data related to variables of gross domestic product, oil prices, international merchandise trade, tourism, unemployment, consumer price index, money supply, and national accounts were collected from September 2019 to July 2020 and analyzed through the fixed effects panel regression technique. The findings show that the news of the Covid-19 outbreak has exposed the weaknesses in energy sectors by having a significant negative impact. Additionally, analysis discloses that the energy and tourism sectors are vulnerable to the shocks of Covid-19. During the peak of the pandemic outbreak, unemployment in Brunei has also escalated. Additionally, the energy and tourism sectors are less resilient to pandemic shocks. The findings indicated that the consumer price index has significantly escalated during the economic recovery process. The findings elucidate that the overall GDP growth rate, international merchandise trade, and the financial sector continue exhibiting better performance amid Covid-19. The findings of this study contribute to developing policy implications for the emerging economies concerned with the economic recovery process during the pandemic.


INTRODUCTION
The case of respiratory infection caused by the novel Coronavirus (Covid-19) was first reported in Wuhan (China) on 31 December 2019, and the World Health Organization declared it a global pandemic on 11 March 2020 (WHO, 2020a). The number of new cases is escalating, and scientists have warned that the world is yet to suffer from the worse (WHO, 2020b). As of 27 July 2020, there are more than 16.19 million confirmed cases of Covid-19 and 647,846 deaths in the world (WHO, 2020b). The American region is anticipated to be the next epicenter of Covid-19 with more than 4,232,979 confirmed cases and 146,927 deaths, and many states decided to continue lockdown (WHO, 2020c). Covid-19 continues to surge globally at an alarming rate and burn economic activities to nearly a standstill as countries decided to reimpose tight safety measures to halt its spread (The World Bank, 2020a). The pandemic has disrupted economic activities at such an unprecedented pace that everyday life patterns are overturned, and econ-omists claim that the world has already entered into a recession (Financial Times, 2020). The emergence of Covid-19 is referred to as a black swan event as it has stifled the global economy particularly, it arrived when the global economy was already showing signs of a slowdown (IMF, 2020a). Many countries have started to ease lockdowns in phases to reopen economies and societies; however, large-scale investment in personal protective equipment (PPE), Covid-19 testing, contact tracing, cleaning, and hygiene products are essential yet challenging to execute (WHO, 2020d).
The outbreak of Covid-19 has left the global economy reeling. The Economist's (2020) article 'Not quite all there' predicted that the 90% damages to the global economy due to the ongoing pandemic would be hard to reverse. These economic damages are so devastating that the global economy shrank by 1.3%, only within the first quarter of 2020 (The Economist, 2020), and the World Bank's (2020a) 'Global Economic Prospects' predicted the contraction of global GDP by 5.2% in 2020. A sequential review of the economic situation worldwide reveals that global stock markets are showing the lowest downtrend as the Dow Jones Industrial Average (DJIA) dropped 13.2%, FTSE declined 19.3%, and Nikkei dropped 5.2% since the start of the outbreak (Bloomberg, 2020). Unemployment is rising due to businesses closure and escalating fear among people to be infected at work, which will end the expansion of advanced economies like the United States, Italy, France, Canada, United Kingdom, Germany, and Japan (IMF, 2020b). Many countries recorded a decline in GDP growth as low as −60% to −15%, and per capita income will contract in developed countries, which will spill-over to the emerging and developing economies (The World Bank, 2020). The airlines significantly reduced their flights due to lack of demand and travel restrictions, which has pushed the tourism industry to the brink of crises (UNWTO, 2020). Lastly, the tumbling oil and gas industry due to steep crude oil prices and escalating geopolitical tension between Saudi Arabia and Russia has seriously affected the GDP growth of the countries that substantially rely on the revenue from oil and gas resources (Ng, 2020).
IMF's Economic Outlook released in April projected the contraction of the Asian economy by 1.6%, which is a very rare case scenario for this region (IMF, 2020c). The projections related to Pacific Asia are relatively optimistic, although ongoing pandemic East and Pacific Asia's per capita income is expected to increase by 0.5%, and Brunei has the second-highest per capita income among the countries located in East Asia (The World Bank, 2020). Pertaining to these optimistic projections, it is forecasted that Brunei's GDP growth will reach US$ 14.79 billion by 2024, and the real GDP will increase by 2.12% (Statista, 2020).
The economic crises unleashed by the Covid-19 outbreak have equally affected high-and low-income countries, and a recent report by UNIDO (2020) concluded that the economic crises are not correlated with health crises. A recent study by Noy et al. (2020) found that a low impact of Covid-19 related to the number of cases and deaths does not necessarily mean a low economic impact. Similarly, a recent report of the African Development Bank (2020) projected the contraction of African countries by 1.7% in 2020, although many regions are comparatively less affected by the pandemic. Even minor public health events can pose serious effects to the firms located in lower-income countries due to their weak capability to respond and poor socioeconomic conditions. Many countries face indirect consequences due to disruptions in the value chain and globally low demand for goods as the widespread recession looms (UNIDO, 2020).
This study has three discrete contributions in literature; first, it contributes to the ongoing research on Covid-19 impacts on economies of high-income countries by analyzing the response and strategies of Brunei Darussalam to contain the spread of the virus. Second, it contributes to estimating the actual direct impact on the economy of the country with the second-highest per capita income in Asia, which will help other East Asian countries benchmark their response to the current pandemic. Third, it contributes to mapping the indirect effects on the economy despite the significantly low spread of Covid-19, analyzing whether globally affected countries have a spill-over effect on Brunei's economy.
The remaining paper is organized as follows: section one discusses the current situation of Covid-19, Brunei's response to the pandemic, and the empirical review of the literature related to the impacts of the pandemic on the economy. Section two describes the research methodology, and section three outlines the major findings and discussion. The last section concludes this paper.

Brunei's response to Covid-19
Brunei is one of the few countries in the world that has successfully flattened the Covid-19 curve and has controlled its spread through its outstanding health care system and generous support from the government. All the infected patients were tested and treated freely at the National Isolation Centre, and the government established different isolation centers throughout the country. As soon as the first case of Covid-19 was reported in Brunei, the government immediately imposed a travel ban, prohibited mas public gatherings, closed mosques, restaurants (dining in) schools, gyms, and parks. Once the situation was under control, the policymakers suggested partially lift the restrictions; however, the public is encouraged to practice so-cial distancing in public places and use BruHealth App to facilitate the Ministry of Health to keep the contact tracing. Other initiatives include the early opening of the Temburong bridge to facilitate the residents of this district working in the capital Bandar Seri Begawan. The government and the banks in Brunei have mutually agreed to defer the loan payments for the industries in tourism, hospitality, events management, and food and beverage for six months (KPMG, 2020). The private sector employees were allowed to take a paid sick leave for one month, and the government announced to contribute 25% to the salaries of private-sector employees for three months to alleviate the financial burden on hard-hit sectors (The Asean Post, 2020). The Ministry of Finance and Economy (MOFE) launched a virtual platform to gather the Bruneian community to help affected micro, small, and medium enterprises (MSMEs). Through this platform, these MSMEs can sell their goods and services through a virtual platform, and the public can buy their products through digital payments (MOFE, 2020).

Covid-19 impact on Brunei economy
Over the past 300 years, the world has suffered from 10 major pandemics of stronger and lesser magnitude, and Potter (2001) has warned to rule out the danger of another medical disaster. During the 20 th century, the world was hit by three major pandemics; Spanish influenza in 1918, Asian influenza in 1957, and the Hong Kong influenza in 1968, which killed nearly 30 to 60 million people (Kilbourne, 2005

Data collection
Considering the time covered during the entire process of the outbreak in this study, it is unlikely that this study at this stage of the pandemic will accurately predict the actual impact on Brunei's economy.

Measurement variables
The key assumptions used in the simulation model to analyze the magnitude of economic shocks in Brunei resulted due to Covid-19 are reported in Table 1. The governments have introduced stimulus packages to combat Covid-19; however, it is anticipated that the price of goods will increase firstly due to global supply chain issues; secondly, the panic buying response among the public will escalate the demand for goods. Brunei is expected to experience a rise in consumer price index due to high dependence on the goods imported from other countries (+) DEPS

Money supply (MS)
The contraction of GDP growth may force the governments to cut their expenditures, which will result in a shortage of money supply. Despite the provision of the stimulus package by the governments, it is projected that the pandemic will affect the money supply in the long run (-) AMBD

National accounts (NA)
Since Brunei has reported a positive growth rate hence, it is projected that the national accounts balance has increased, and Covid-19 will not have a significant impact as Brunei has successfully contained the spread of infection Neutral AMBD

Model description
The impact of Covid-19 on Brunei's economy is calculated using simple regression analysis, which is as follows: For the purpose of this study, the above model is simulated as follows:

Exposure to economic shocks amidst Covid-19
Firstly the analyses focus on Brunei's exposure to economic shocks during Covid-19. To estimate this, the time event between 1 September to 9 January was considered as this duration covers the time when the first case of the Covid-19 outbreak was reported in China, which will directly analyze whether the economic system of Brunei experiences significant shocks due to the news of the outbreak. To estimate the exposure, mean, median, and standard deviation of the simulation model variables were estimated. Additionally, t-test was performed to analyze the significance of an event's economic impact, which is essential to calculate the economic indicator's deviation from the average (Chen & Siems, 2004). The results of mean, median, standard deviation, and t-test are reported in Table 2. Note: * represents significance at the 5% level, and ** represents significance at the 1% level.
The results in Table 2 indicate that mean, median, and standard deviation have a positive value, which indicates that economic indicators such as trade (GDP growth rate), real economy (oil prices, international trade merchandise, tourism, unemployment rate, consumer price index) and finance sector (money supply and national accounts) show regular performance. Moreover, t-statistics have an insignificant positive value (except oil prices), which indicates that the economic indicators do not deviate from their average performance despite the initial news of the pandemic outbreak. The oil prices indicator shows a negative and significant (5%) value, which can be cautiously inter- To further confirm whether the Covid-19 news outbreak has exposed Brunei's economy to experience economic shocks, panel regression analysis was used. The panel data technique is useful in providing explanatory data for cross-sectional information. Moreover, it is a suitable method as it successfully explains the variance in a variable over a specific time duration, which will help record dynamic adjustment (Ali et al., 2018). The fixed effects panel regression method was preferred over the random effect as the latter technique requires cross-sections to be greater than coefficients. The results of the regression analysis are reported in Table 3.
The results of the panel regression analysis (Table  3) indicate that the selected model is suitable to estimate the exposure to economic shocks of Covid-19 as the values of R 2 (80.45%) and adjusted R 2 (77.45%) are greater than the threshold value of 60%. Now, moving to the results of coefficients, t-statistics, and significance, it is clear that gross domestic product (GDP), international merchandise trade (IMT), unemployment rate (UR), consumer price index (CPI), money supply (MS), and national accounts (NA) have the positive and insignificant values, which indicates that these var-iables are performing normal and are not exposed to Covid-19 shocks. Whereas coefficients, t-values, and significance results of oil prices (OP) and tourism (TM) have negative values, which are significant at 1% and 5% level. Indeed, these two sectors are significantly exposed to the shocks of Covid-19 due to the decline in global demand for oil, and many countries issued a travel warning and imposed bans to control the spread of infection.

Vulnerability to economic shocks amid Covid-19
To analyze the Brunei economy's vulnerability to Covid-19 shocks again mean, median, standard deviations, and t-statistics of the economic indicators during the second phase were estimated. The results are reported in Table 4. Note: * represents significance at the 5% level and ** represents significance at the 1% level. Note: *** represents significance at 1%, ** at 5%, and * at 10%, respectively.
The results in Table 4 show that the economic indicators such as the energy sector (oil prices), tourism, and labor (unemployment rate) have a negative mean, representing that these three sectors are weak and vulnerable to the shocks of Covid-19. While gross domestic product, international trade merchandise, consumer price index, money supply, and national accounts have positive and insignificant values, it is inferred that these economic sectors can absorb the shocks of Covid-19. Additionally, t-test values show that oil prices, tourism, and unemployment rate have negative values, significant at 1%, 5%, and 1% level. This finding affirms the dire need for alternative methods to diversify Brunei's economy and minimize its dependence on the revenue from oil and gas and tourism. Covid-19 is a straw that broke the camel's back, especially when the oil-dependent economies face dual shocks of human and economic loss (Arezki et al., 2020).
The panel regression analysis was also performed to explore the vulnerability of Brunei's economy to the possible shocks of Covid-19. Table 5 reports the results of panel regression analysis.
The results of R 2 and adjusted R 2 in Table 5

Resilience to economic shocks amid Covid-19
The resilience of the Bruneian economy to the possible shocks of Covid-19 is measured by performing similar tests. The spread of infection seems contained in Brunei at this stage; however, there are countries in the world, such as Africa and Fiji, despite the low spread of virus economy of these countries contracted due to spill-over effects and lack of resilience in the economy (Noy et al., 2020). This stage of analysis is essential to develop the implications for economic recovery in case of a bad economic situation in Brunei. The mean, median, standard deviation, and t-statistics were estimated to test the resilience of Brunei's economy. The results of these tests are reported in Table 6. Note: *** represents significance at 1%, ** 5%, and *10%, respectively.
The results in Table 6 show that mean, median, and t-values of GDP growth rate, international merchandise trade, unemployment rate, money supply, and national accounts are positive, which confirms the resilience of these economic sectors. In contrast, the energy and tourism sector continues to underperform along with a significant rise (1% level) in the consumer price index as their means found to have negative and significant t-test values.
The resilience of Brunei's economy is also tested using panel regression analysis. The results of panel regression analysis are reported in Table 7.
The results in Table 7 show that the model fitness criteria are satisfactory as the values of R 2 (80.66%) and adjusted R 2 (78.67%) is greater than the threshold value of 60%. The coefficients, t-values, and significance values further confirm that GDP growth rate, international merchandise trade, unemployment rate, money supply, and national accounts are resilient to the shocks of Covid-19. In contrast, energy and tourism sectors are not resilient as they continue to underperform despite control of the pandemic outbreak in Brunei. The significant rise in the consumer price index is possibly due to the imbalance between demand and supply. This finding can be interpreted as an ongoing battle against Covid-19 that has resulted in a lack of demand for crude oil, and the imposition of travel restrictions by many countries has severely affected the global tourism sector. Hence, we predict that the energy sector, tourism sector, and the consumer price index are less resilient to the shocks of Covid-19 due to spill-over effects from the countries battling against the pandemic. Note: * represents significance at the 5% level, and ** represents significance at the 1% level. Note: ***represents significance at 1%, ** 5%, and *10%, respectively.

CONCLUSION
This study examined the economic shocks in Brunei triggered by the Covid-19 pandemic. These shocks were estimated by analyzing the phases of a pandemic outbreak. This study deployed a popular model known as the 'United Nations Disaster Risk Reduction' (UNDRR) framework to analyze economic shocks. The collected data of the adopted variables indicates that the energy and tourism sectors, unemployment, and consumer price index are the most affected, vulnerable, and less resilient sectors of the economy.
The results in this study indicate that the energy and tourism sectors were significantly affected by the initial news of the Covid-19 outbreak. While the pandemic was at its peak in Brunei, the energy and tourism sectors continue to plunge, and unemployment escalated during this period, a typical response of Covid-19 as many SMEs in Brunei furloughed workers to cut cost and minimize the spread of infection. The resilience scenario results predicted that the energy and tourism sector continues to underperform. The consumer price index shows less resilience due to the disproportionate balance between demand and supply of goods and services. Interestingly, the GDP growth rate and international trade shows resilience and are less vulnerable to economic shocks due to their capacity to absorb the shocks of Covid-19.
This validation of the estimation model (UNDRR) in the context of economic shocks measurement ushered by Covid-19 is the main contribution of this study. This will help the governments develop the matrices to inspect the economic shocks during the transformational event such as Covid-19.
This study has various theoretical and practical implications for regulators and policymakers. First, governments need to ensure that it continues practicing the policies suggested for economic recovery by international regulatory bodies such as the World Bank and IMF. Second, the government may consider revising and introducing another stimulus package for MSMEs, which will develop capacities to cushion the Bruneian economy through economic diversification and acting as a substitute to the energy and tourism sector. Third, the government needs to develop a broad socioeconomic development plan inclusive of the sector by sector plan that will help develop an ecosystem to encourage entrepreneurship and ensure success for the businesses with a sustainable model. Lastly, policymakers and the public should strictly continue practicing precautionary measures within the societies and at the workplace so that Covid-19 remains subsided in Brunei.