Myanmar growth slowed in election year: World Bank

Myanmar farmerEconomic growth in Myanmar has been hampered by a more difficult economic environment in the country’s fiscal year 2015-2016 (April 1 to March 31), the World Bank in a latest evaluation said.

GDP growth declined to 7 per cent during the period, compared with 8.5 per cent in 2014-2015, according to the World Bank’s May 2016 edition of the Myanmar Economic Monitor. The slower growth came amid a supply shock from heavy flooding, a slowdown in new investment during an election year and a more challenging external environment including lower commodity prices affecting Myanmar’s main exports.

The report found that exports declined by 12 per cent in nominal terms in the first three quarters of 2015-2016 year-on-year. This contributed to a growing trade deficit and has put pressure on the exchange rate. Ongoing structural constraints, short-term exchange rate pressures, rising inflation peaking at 16 per cent in October 2015 and the recent political transition contributed to a deceleration in new investment flows.

However, the world Bank concedes that Myanmar’s economic growth was still “robust.”

“While Myanmar’s economic growth has eased in this past year, it still remains a powerful engine of change and development for the people of Myanmar,” said Abdoulaye Seck, World Bank Country Manager for Myanmar.

“Growth prospects are positive provided a continued focus by the government on structural reforms and on maintaining macroeconomic stability,” he added.

Myanmar exports
Myanmar export treemap (click to enlarge)

Real GDP growth in Myanmar is projected to rise to 7.8 percent in 2016-2017 and average 8.2 percent per year over the medium-term as the economy recovers from the 2015-2016 slowdown and private investments start to pick up again. The agriculture sector is projected to bounce back over the short-term, while investors’ demand for services and infrastructure construction are expected to be the main drivers of growth.

Macroeconomic policies and better managed institutions should also help ease the pressures from 2015-2016. In the short-term, this includes balancing a reduction in the government deficit and prudent public debt management for economic stability with an increase in spending for public services and growth.

“Ongoing revenue administration and policy reforms, together with more efficient spending, are expected to contribute to macroeconomic stability in Myanmar, whilst enabling the government to expand public services,” said Mathew Verghis, World Bank Manager for the East Asia and Pacific Macro-Fiscal Practice.

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Economic growth in Myanmar has been hampered by a more difficult economic environment in the country’s fiscal year 2015-2016 (April 1 to March 31), the World Bank in a latest evaluation said.

Myanmar farmerEconomic growth in Myanmar has been hampered by a more difficult economic environment in the country’s fiscal year 2015-2016 (April 1 to March 31), the World Bank in a latest evaluation said.

GDP growth declined to 7 per cent during the period, compared with 8.5 per cent in 2014-2015, according to the World Bank’s May 2016 edition of the Myanmar Economic Monitor. The slower growth came amid a supply shock from heavy flooding, a slowdown in new investment during an election year and a more challenging external environment including lower commodity prices affecting Myanmar’s main exports.

The report found that exports declined by 12 per cent in nominal terms in the first three quarters of 2015-2016 year-on-year. This contributed to a growing trade deficit and has put pressure on the exchange rate. Ongoing structural constraints, short-term exchange rate pressures, rising inflation peaking at 16 per cent in October 2015 and the recent political transition contributed to a deceleration in new investment flows.

However, the world Bank concedes that Myanmar’s economic growth was still “robust.”

“While Myanmar’s economic growth has eased in this past year, it still remains a powerful engine of change and development for the people of Myanmar,” said Abdoulaye Seck, World Bank Country Manager for Myanmar.

“Growth prospects are positive provided a continued focus by the government on structural reforms and on maintaining macroeconomic stability,” he added.

Myanmar exports
Myanmar export treemap (click to enlarge)

Real GDP growth in Myanmar is projected to rise to 7.8 percent in 2016-2017 and average 8.2 percent per year over the medium-term as the economy recovers from the 2015-2016 slowdown and private investments start to pick up again. The agriculture sector is projected to bounce back over the short-term, while investors’ demand for services and infrastructure construction are expected to be the main drivers of growth.

Macroeconomic policies and better managed institutions should also help ease the pressures from 2015-2016. In the short-term, this includes balancing a reduction in the government deficit and prudent public debt management for economic stability with an increase in spending for public services and growth.

“Ongoing revenue administration and policy reforms, together with more efficient spending, are expected to contribute to macroeconomic stability in Myanmar, whilst enabling the government to expand public services,” said Mathew Verghis, World Bank Manager for the East Asia and Pacific Macro-Fiscal Practice.

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