Myanmar’s economy is slowly regaining stability and picking up speed after a volatile 2018, according to a new World Bank report
The Myanmar Economic Monitor projects Myanmar’s economy 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 garment sector and construction activities.
Services remain the key driver of growth with momentum building in the wholesale and retail sector supported by reforms.
However, large disparities in welfare persist across the country.
Gevorg Sargsyan, Head of Office, World Bank Myanmar, said 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.
This will help Myanmar maintain its momentum and meet its long-term growth targets.
Economic growth is expected to rise to 6.7 percent in 2020/21.
The World Bank report projects a positive outlook for Myanmar’s economy despite a deteriorating global environment.
This is due to accelerated implementation of reforms, infrastructure spending and investment in sectors such as wholesale and retail, insurance and banking that are undergoing liberalization.
The external risks to the economic outlook include slowing global and regional growth and escalation of trade tensions and possible revocation of preferential EU market access.
Inflation is expected to stabilize at 6.6 percent in the medium term.
The report notes that inflationary pressures could increase due to volatile global energy prices and the possibility that the government may increases electricity tariffs to bring them in line with the cost of power production.
“There are signs that market sentiment is rising due to the new laws being passed and starting to be implemented,” said Hans Anand Beck, Lead Economist, World Bank Myanmar.
“Keeping these reforms going will be critical to continued economic momentum, for example through insurance liberalization, tax reform, and transparent investments in the power sector.”
In the power sector, the report argues that Myanmar needs to invest twice as much and implement projects three times faster to meet growing demand.
SD Reza, our Indonesia correspondent, attended the briefing by Muhammad Lutfi, Indonesian ambassador to the US.