YANGON — Amid risk remaining high, Myanmar’s economy performed better in the 2017-18 fiscal year with a recovery in agriculture, improved manufacturing performance with garments continuing to excel and strong services growth, the World Bank said in its Myanmar Economic Monitor report released on Thursday.
It said that the economy experienced a broad-based increase in real GDP growth to 6.4 percent in 2017-18 from 5.9 percent in 2016-17. Growth is projected to increase to 6.8 percent in 2018-19.
Inflation also declined year by year, from 7 percent in 2016-17 to 5.5 percent in 2017-18 and is expected to ease further to 4.9 percent, the World Bank said.
Rice exports reached record highs and like garments continued to access new markets, the report stated, while gas exports were propped up by a significant, but uncertain, increase in global gas prices, offsetting declining production from maturing fields, it stated.
While it noted that while economic outlook is positive, there are concerns that the slow pace of reforms, vulnerabilities in the financial sector and limited progress in addressing the humanitarian crisis in Rakhine are starting to affect business sentiment.
Investors concerned about the reputational risk of operating in Myanmar may defer already committed FDI or new investments, it said.
Foreign direct investment (FDI) approvals declined by 14 percent in relation to 2016-17, but FDI flows adequately financed the current account deficit, it added.
External risks from uncertainty in global trade policy and in commodity prices intensify the downside risks to the growth outlook, stated in the report.
The bi-annual report analyzes economic developments, economic prospects and policy priorities in Myanmar, based on available data reported by the Myanmar government and collected as part of the World Bank’s regular economic monitoring and policy dialogue.
U Zaw Myo Hlaing, managing director of Unique Network Marketing Co., Ltd, said during the panel discussion at the report launch event on Thursday that the report is contrary to what most businessmen and farmers are saying in that doing business has become more difficult.
“Those working are saying that there are difficulties in doing business,” he said.
“The GDP growth is not exciting, as it doesn’t impact everyone in the country,” he said, adding that people are not feeling much positive change due to the growth.
He urged wider awareness on taxation, assistance for small and medium enterprises, and combating corruption to improve the current climate of doing business.
“It’s very important that the benefit of growth and income increases are shared across the population. This year, a lot of growth came from the agricultural sector, which comprises farmers. So they’re producing more crops – rice, beans, and pulses – that are being demanded, not only in Myanmar but outside. The sale of those crops generates income for those farmers. We do feel that the rapid progress that Myanmar has made on reducing poverty with stable inequality can continue,” Hans Anand Beck, lead economist of the World Bank, told The Irrawaddy.
The agriculture sector accounts for 26 percent of GDP, industry and manufacturing account for 33 percent, and services account for 41 percent.
Favorable weather conditions and increased external demand caused agricultural output to rise by an estimated 2.5 percent in this fiscal year.
The World Bank suggested that implementing the cogent new Myanmar Sustainable Development Plan, collecting more revenue and spending it better, and providing greater policy certainty and a simpler operating environment for businesses could support investment and economic prospects.