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EH Economic Research underwrites risks
In FY2016-17, the economy grew more slowly at 5.9% (after +7.3% in FY2015-16). In Yangon, the building sector developed weakly, as some Yangon project were canceled. For the future, the economy is projected to gradually accelerate. Secondly, the internal economy will profit from a strong development of the Yangon building sector and a further increase in FDI intakes.
Over the longer run, further consolidation, further consolidation in local and international delivery networks and further reform could contribute to annual growth of 7-8%.
Secondly, both the economic and economic environments are fragile, which could hamper capital expenditure expansion. There is a limit to the amount of data in the buffer. Financial managment is poor. Government indebtedness is at an agreeable low due to a huge write-off by debtors and Japan's assistance in offsetting debts with the World Bank. Nevertheless, the budget is in a downwards trend.
Budget deficits increased from -0.9% in FY2014-15 to -4% in FY2016-17. It is even more important that almost the entire budget is funded by the central bank. There are several major issues facing the Central Bank.
The weaknesses are compounded by bad buffering (e.g. currency reserve of almost 3 months) and the weakness of general conditions and bank supervisory measures. In addition to the low level of reserve assets, the country's balance of payments is in acute debt (-6.7% BIP forecast for 2017-18). This will rise due to the sustained expansion of investment goods exports.
In the World Bank's Doing Business poll, the country is still in a bad position (171 out of 190), with considerable deficiencies in the implementation of contracts and in protecting investments.