Myanmar finds improved economic growth at 6.5% in 2019
Myanmar economy is expected to rebound at 6.5% in 2019 after growing at a much slower pace in 2018 (6.2%). World Bank economists also expect the Myanmar economy to continue growing next year at 6.6%.
Reasons for lower economic growth
Despite improving economic growth and favorable long-term growth prospects, weakening export demand and lower private construction activity are causing growth in Myanmar to not meet its potential.
The International Monetary Fund (IMF) has also cautioned potential disruptions, such as the Rohingya refugee crisis and the fragile banking sector, that can affect growth in Myanmar.
According to the IMF, not resolving the Rohingya refugee crisis promptly can cause lower growth due to concessional investment and donor financing, especially if there are any withdrawal of trade preferences. Delaying recapitalization by banks may also result in more severe macro-financial spillovers.
What’s more, headline inflation is currently increasing due to higher fuel prices and depreciating Myanmar currency (kyat).
Solutions to drive Myanmar economy
According to Andrew Mason, World Bank’s acting chief economist for East Asia and the Pacific, there are several things Myanmar can do to improve the local economy. These include reforming the business environment to attract local and foreign investment and increase productivity, investing in human capital and basic services like health, education, and nutrition, and improving infrastructure and connectivity in the country.
Investing in human capital and basic needs would allow Myanmar to become an upper-middle income economy, whereas investments in high-quality infrastructure projects will create inclusive growth in the country.
To do so, World Bank Myanmar’s lead economist Hans Anand Beck recommends Myanmar to open to domestic and foreign investments and create a transparent process for licensing. This means removing trade barriers for companies and liberalizing more sectors to stimulate competition and lower cost.
Other solutions that can drive sustainability in Myanmar economy includes collecting revenues in the form of tax, allowing flexible interest rates, investing more in the power sector (due to increasing demand for electricity), and empowering small- and medium-sized enterprises. Doing these can help Myanmar improve its GDP and economic growth.