Myanmar EconomyThe Myanmar Economy
The ADB sees more growth for Myanmar's economy, urges reform
Rangoon - Myanmar's GDP grew from 5.9 to 6.8 per cent last year due to a buoyant agricultural industry, exports expansion and healthy consumer spending, the Asian Development Bank (ADB) said in its Asian Development Outlook 2018. They expect the economy to remain at this speed this year and to even exceed 7 per cent by 2019, as long as the economy can implement reform to enhance the corporate climate.
The ADB reports that last year's slowdown was supported by a reversal in the agricultural trend due to better wheather and the highest travel export in half a centur y. There was also continued buoyant global interest in the country's clothing last year, while the number of tourists arriving increased by 18 per cent to 3.4 million.
He noted that the recent eruption of force in Rakhine's north, which has pushed around 700,000 Rohingya into neighbouring Bangladesh since the end of August, has had little commercial impact so far. However, he said that capital spending may have slowed as traders waited for clarification of upcoming corporate legislation.
For the future, the ADB anticipates that the agricultural industry, which represents 30 per cent of the country's GNP, will gain further momentum when the dryness continues. Export growth would also be maintained, but not as rapid as import growth, as foreign direct investments (FDI) and the high level of government investments in infrastructures are persist.
Together with increasing fuel costs, Myanmar's balance of payments shortfall will continue to grow, reaching 5.5 per cent of GNP by 2019. Overall, the ADB predicts 7.2 per cent overall GNP for the coming year, but warns that further expansion will be dependent on a whole series of reform measures.
"Myanmar's bright prospects depend on increasing the country's finite level of official funding by involving developing countries, external investment and the local residential market in an effective way to help fund its dizzying infrastructural needs, reduce local socio-economic imbalances and promote the long-term growth agendas. While the ADB said Myanmar's youth labour force would remain a magnet for FDI in labour-intensive, export-oriented industry, it added with worry that despite some recent liberalisation, the government's FDI rules are still more stringent than most of its competitors in the area.
"Fortunately, in December 2017, advances in the adoption of a new corporation act can reassure international investment that business reforms will continue," the EBRD said. "Similarly, a 238-point governance effort to develop an ambitious stimulus plan should keep Myanmar's sustainable development plan busy with investor involvement.