World economies
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.