Myanmar Growth Projected to Recover Following a Slowing Economy in 2016

Stocks and Financial Services Press Releases Tuesday January 31, 2017 09:19
YANGON--31 Jan--World Bank

YANGON, January 30, 2017 – Myanmar's economy will grow an average of 7.1 percent per year in the next three years, as inflation pressures are expected to ease up and private and public investments in infrastructure services and non-commodity sectors, such as light manufacturing and hospitality, are forecasted to rise, according to a World Bank report released today.

While Myanmar's outlook is relatively favorable, the country faces several macroeconomic risks to stable growth, says the Bank's latest edition of the Myanmar Economic Monitor. Those risks include a narrow production base, a more competitive global market, a lack of diversification in commodities, vulnerability to natural disasters, and higher prices for international commodities.

As investors remain cautious, the report suggests that Myanmar's new government take steps to improve the clarity, communication and credibility of its economic policies. An economic vision building on the 12-point economic policy issued last July, complemented by regular reporting on near term economic policies and conditions, could help anchor economic expectations and sustain investor confidence.

"Policies to sustain stable and inclusive growth are critical for creating more opportunities for people to earn and have better jobs in Myanmar," said World Bank Country Manager for Myanmar Abdoulaye Seck. "They are also important for reducing the high inflation that impacts the poor the most adversely."

Economic growth in Myanmar is projected to moderate from 7.3 percent in 2015-2016 to 6.5 percent this year. The new government navigated a difficult economic environment during its first six months in office, as the country continued to recover from a decreased supply of commodities due to last year's floods. The floods, along with low commodity prices and slowing foreign investment, contributed to widening current account and fiscal deficits.

Agriculture's recovery from flooding caused by Cyclone Komen was hampered by long-established constraints to productivity in the sector, such as low quality of seeds and fertilizer supply. This has contributed to the general slowdown in industrial activity, including food processing. Supply constraints in the economy contributed to high inflation, which persisted in the first half of 2016.

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