Economy to Grow by Seven Percent This Fiscal Year, Observer Group Predicts

By The Irrawaddy 9 May 2017

RANGOON — Burma’s economy is predicted to grow by at least seven percent in the 2017-18 and 2018-19 fiscal years after growth of six percent last fiscal year, predicted regional observer group ASEAN +3 Macroeconomic Research Office (AMRO).

Moderate growth in Burma last fiscal year (6.3 percent) compared to 7.3 percent the year before was accounted to slowing agriculture and construction and declining gas prices, said AMRO’s report titled ASEAN+3 Regional Economic Outlook (AREO) 2017.

The annual regional surveillance publication predicted an uptick in GDP growth this fiscal year due to greater manufacturing and a recovery in agriculture after 2015’s severe floods.

Increased investment is also likely to fuel GDP growth following the implication of Burma’s new Investment Law, although a lack of detailed regulations continues to deter investors.

The opening of Special Economic Zones (SEZs), including Thilawa to the southeast of Rangoon, is also predicted to spur growth.

Government efforts to enhance monetary policy through deposit auctions, a new reserve requirement regime, and improved forecasting allowed the Central Bank to manage inflation with more success in the 2016-17 fiscal year; inflation averaged 6.8 percent in 2016-17 compared to 10 percent the year before.

Burma’s financial and economic stability remain at risk from high credit growth and low central bank foreign reserves, AMRO warns.

Burma’s 2016 Financial Institutions Law is an important step in mitigating financial risk, but the government should introduce closer inspections of commercial banks and publish reports on their financial soundness, the report recommends.

AMRO predicts Southeast Asian economies will collectively grow by around 5 percent this fiscal year and next.

The World Bank predicted that GDP would grow by 7.1 percent a year on average over the next three years, while the Asia Development Bank predicted Burma’s GDP growth as 7.7 percent in 2017 and 8 percent in 2018.