Myanmar is a largely rural, densely-forested country, situated in the South Asian region. Until 2011, Myanmar was one of the world’s most isolated economies.

The country embarked on a major policy of reforms including anti-corruption,currency exchange rate and foreign investment laws andtaxation. A shift from central planning toward an open market economy is under way.

With 26 per cent of the population still living below the national poverty line, Myanmar remains one of the poorest Asian countries. It falls in the lower-middle income group with a GNI per-capita of $1,455 in 2017, but ranked as one of the fastest growing economies in the East Asia and Pacific region and globally.

Myanmar has an abundance of natural resources and has highly fertile soil and important offshore oil and gas deposits. Other productive segments of the economy include mining, manufacturing, agricultural processing, and construction.

Foreign investment is largely channeled into telecommunications, oil and gas, and manufacturing. Myanmar’s large service sector accounts for about 46pc of GDP whereas industry accounts for 26pc. The agriculture sector contributes 28pc to GDP, accounts for 23pc of exports and employs some 60pc of the country’s workforce.

The major agricultural produce is rice which accounts for 97pc of total food grain production by weight. It is the world’s largest exporter of teak and a principal source of jade, pearls, rubies and sapphires.

According to the World Bank, the country needs to continue improving its investment climate, banking sector and strengthen its implementation capacity under major reform programmes.

The economy slowed down in 2016-2017 and is expected to grow by 6.7pc in 2018/19 and seven per cent in 2019/2020, driven by services, industry and agriculture, provided the government can manage reforms to improve the business environment.

The positive economic outlook depends on Myanmar efficient utilisation of limited public resources and engaging domestic private sector to help finance its staggering infrastructure requirements, narrow regional socioeconomic disparities and support the long-term development agenda.

While concerns over the slow pace of economic reforms and the Rakhine crisis have led to economic slowdown, the country’s fiscal deficit has swelled. The government has proposed a slightly increased deficit for 2017-18, with falling revenues giving it little opportunity to fulfil promises to ramp up social spending.

Myanmar had been traditionally borrowing from the central bank to finance its fiscal deficits. The previous government had financed up to 90pc of the fiscal deficits through borrowings from the central bank.

Under a new policy with respect to the central bank financing, the present government funded 40pc of the 2016-17 fiscal deficit from central bank borrowings.

Deficit funding would be slightly higher in 2017-18 as the change of fiscal year from October to September instead of April to March is likely to weigh on the deficit but expected to fall further to 20pc in 2018-19 and 2019-20.

Maldives

Maldives, an island country situated in Southern Asia, is one of the smallest and least populous countries in the world.

The island became a republic in 1968, three years after independencefrom the UK in 1965. The economy is to a large extent based on tourism.

Tourism today is the country’s biggest foreign currency earner and the single largest contributor to the GDP. It contributes 28pc to the GDP and more than 60pc to foreign exchange receipts. Over 90pc of government tax revenue comes from import duties and tourism-related taxes.

Fishing is the second leading sector. Agriculture and manufacturing play a minor role in the economy, constrained by the limited availability of cultivable land and shortage of domestic labour. Most staple foods are imported.

Industry consists mainly of garment production, boat building and handicrafts and account for around 18pc of GDP.

New industries that have emerged include printing, production of PVC pipes, brick making, marine engine repairs and bottling of aerated water.

The government initiated an economic reform programme in 1989, but it still has a complex political situation, weak government institutions and a high fiscal deficit and public debt.

Diversifying the economy beyond tourism and fishing, reforming public finance, increasing employment opportunities, and combating corruption and a growing drug problem are near-term challenges facing the government.

Despite the challenges, the Maldives has maintained a strong economy. The country achieved remarkable growth during 2001-2010, averaging 12pc per annum. In 2011, Maldives graduated from least developed country status to middle-income and is now categorised as an upper-middle-income country.

After averaging 10.4pc during 2001-2015, the economy grew by 3.9pc in 2016 and continued to improve in 2017, growing by an estimated 4.6pc, on a recovery in tourism and a continued strength in construction but faces large and growing imbalances.

The economy is expected to grow by 4.9pc in 2018. On the fiscal side, however, the fiscal deficit widened in 2016 to 10.3pc of GDP driven by lower than expected revenue and large arrears clearance despite unchanged current spending, according to the IMF.

The fiscal deficit remained in a favorable position in 2017 as a result of the continued effort to streamline government recurrent expenditure coupled with an estimated increase in total revenue.

The public investment programme is expected to keep the budget deficit high in 2018. Tax revenues are expected to increase in 2018, driven by tax reforms on imported products, as well as the payment of an airport tax by tourists since June 2017.

Published in Dawn, The Business and Finance Weekly, June 4th, 2018