YANGON - Myanmar’s positive political developments and structural reform programmes will help foster economic growth and investment, says a new Asian Development Bank (ADB) report launched today.
In its Asian Development Outlook 2016, ADB forecasts Myanmar’s economic growth to recover to 8.4 per cent in fiscal year 2016 (ending March 31, 2017). The country’s economic growth eased to an estimated 7.2 per cent last fiscal year due to widespread flooding and landslides.
“Though economic reforms implemented since 2011 have had positive outcomes, Myanmar’s new government will face the challenges of advancing economic reform, addressing infrastructure and labour shortages, and making progress towards peace and social cohesion,” said Winfried Wicklein, ADB Country Director in Myanmar. “Moreover, intensified efforts are needed to connect and develop rural areas to improve access to markets and services, and to generate opportunities and jobs.”
Foreign direct investment is expected to get a lift from the successful political transition following national elections in November 2015, with investment flowing into newly established special economic zones and rapidly expanding transport, telecommunications, and energy sectors.
Risks to Myanmar’s economic outlook include thin external and fiscal buffers, the capacity of the government to maintain reform momentum, ethnic and sectarian tensions, and vulnerability to bad weather.
The ADO 2016 emphasises that Myanmar’s transport infrastructure, after decades of under-investment, provides poor access to markets and services, perpetuates poverty and regional inequality, and hampers business development. ADB estimates that US$60 billion is needed through 2030 to upgrade transport systems to a standard seen in other countries at a similar stage of development.
“This means increasing transport sector investments to the equivalent of 3-4 per cent of gross domestic product from little more than 1per cent in recent years,” said Peter Brimble, ADB deputy country director in Myanmar. “Private sector resources will need to be mobilised given the immense funding requirements.”
Inflation will moderate as agricultural recovery from the floods brings down food prices. But it is estimated to remain high at 9.5 per cent in the fiscal year 2016, before declining to 8.5 per cent in the next fiscal year.