Myanmar’s economy is slowly picking up speed and regaining stability after a volatile 2018, supported by subsiding price and exchange rate volatility.
Recent developments
- Real GDP is projected to grow at 6.5 percent in 2018/19. Growth continues to be broad-based, supported by the industrial and service sectors. Industrial activities revived, supported by strong performance in the garments sector and construction activities. Services remain the key driver of growth with momentum building in the wholesale and retail sector supported by reforms.
- Inflation declined to 6.1 percent in January 2019 from a peak of 8.8 percent in October 2018 as the exchange rate stabilized and fuel prices fell. But fuel and food prices pushed inflation up again to 7.9 percent in March.
Economic outlook and risks
- Myanmar’s economic outlook is positive with growth projected to further accelerate to 6.7 percent in by 2020/21. Growth will be supported by building reform momentum, planned large infrastructure projects and investment in sectors undergoing liberalization.
- Recent reform actions include: officializing the use of Chinese yuan and Japanese yen for trade settlements; inviting five foreign life insurance companies to apply for licenses in Myanmar; allowing commercial banks to lend at 16 percent interest without collateral; allowing foreign banks to operate in Myanmar; and introducing electronic budget submissions.
- Downside risks to the economic outlook are driven largely by external sources, including slowing global and regional growth and escalation of trade tensions; possible revocation of preferential EU access under the Generalized System of Preferences; and possible increases in oil prices and electricity tariffs that would add to inflationary pressures.
Key findings of special topics
- In the power sector, Myanmar needs to invest twice as much and implement projects three times faster to meet growing demand. Investments should be informed by least-cost planning and facilitated by higher electricity tariffs and measures to reduce the cost of system inefficiencies.
- The Multidimensional Welfare Indicator (MDI), prepared with government, indicates that most of the population in Myanmar faces overlapping disadvantages, with large disparities in welfare apparent across states and regions and across townships within them. The MDI is already starting to contribute to targeting public resources and aid flows toward those who need it the most, with more effective interventions.
"Acceleration of the reform agenda as envisioned in the Myanmar Sustainable Development Plan, along with targeted public investments and private sector participation, will lead to a consolidation of macroeconomic stability and help Myanmar maintain its positive momentum and meet its long-term growth targets."