Brunei, although a “wealthy” country with free healthcare and abundant natural resources, has been facing a few problems recently. The country has a 5.1 percent unemployment rate yet it employs 60,000 foreign workers. Oil money sloshes through government coffers, yet every year since 1994 Brunei has had a budget deficit averaging 1 billion Brunei dollars (about $584 million), equivalent to 15 percent of its gross domestic product.
Brunei is most famous for its natural resources; crude oil. The government gains millions of money from oil exports, however this money has not been used properly for the benefits of the citezens. Ever since 1994, Brunei has a budget deficit of approximately 1 billion (Brunei dollars). This is equivalent to 15% of the country’s GDP.
With money constantly flowing out of the economy, government budgets for providing free healthcare and subsizising gasoline and other products that may be necessities to many people, may soon come to an end. The government may have to borrow money from other countries, because it has so limited money source, since the country earns most of its income solely through exports, and income tax does not exist. It will be very difficult for the government to start charging citezens for healthcare, the real price of gasoline, etc., because. Also with the relatively high unemployment rate, the ability for consumers to pay for their own healthcare, necessities will fall. AD is likely to decrease further in the future, unless the government takes action to resolve the unemployment rate.
Overall, it is very challenging to attain macro objectives, because of trade-off problems. Growth and low employment are the key goals of every successful economy. Growth and inflation, in the short run, are often trade-offs, because of the inflationary pressure resulting from government measures to try to stimulate cosumer spending. When unemployment rises, the government can decrease taxes and/or increase government spending, thereby increasing aggregate demand.