World Bank Forecasts 7.8% Growth in Burma This Year
By Kyaw Hsu Mon 5 October 2016
RANGOON — The World Bank has predicted strong economic growth in Burma through the 2016-17 fiscal year, ending in March.
In its growth outlook for “developing East Asia and Pacific” for 2016-18, released on Wednesday, the World Bank projects growth in Burma to hit 7.8 percent for the fiscal year, with inflation easing to 8.5 percent [against 12.4 percent as cited by the Central Bank in August].
However, this positive outlook has been met with skepticism by business leaders in Rangoon, who have cited the impact of flooding in recent months, lower than expected foreign investment under the new government since April, the current rapid depreciation of the Burmese kyat, stubbornly high inflation and weak global demand.
“The outlook for developing East Asia and Pacific remains positive, with weakness in global growth and external demand offset by robust domestic consumption and investment,” said Victoria Kwakwa, World Bank Vice President for East Asia and Pacific.
“The long-term challenge is to sustain growth and make it more inclusive, including by shrinking gaps in income and access to public services,” Victoria Kwakwa said.
For Burma, the World Bank prescribes “a combination of continued fiscal prudence, enhanced monetary operations, exchange rate flexibility and strengthened banking supervision capacity.”
Dr. Maung Aung, a senior economist at the Ministry of Commerce, was among those in Burma to cast doubt on the World Bank’s broadly sunny picture. He told The Irrawaddy that government efforts to boost the economy had been frustrated by “slow” growth, while inflation had proven difficult to rein in.
He suggested that, for one thing, the World Bank had not properly factored in the impact of flooding in recent months on economic growth.
U Thein Tun, chairman of Tun Foundation Bank and one of Burma’s most prominent tycoons, told The Irrawaddy that he wondered how the World Bank arrived at such figures: “I can say the growth is really slow now.”
With the installation of the new National League for Democracy (NLD) government in April, some expected foreign investment to pour in to Burma’s “frontier” market. However, many investors having been sitting tight, waiting on the required legal reform. A new Myanmar Investment Law was approved on Wednesday by the Upper House of Parliament, having previously passed in the Lower House.
Potential investors and Burmese business leaders have also been frustrated at a lack of detailed economic policy from the NLD government.
According to the Myanmar Investment Commission, foreign direct investment amounted US$701 million between April and the end of August—compared to approximately US$2 billion for the same period last year.
In August, Burma’s Central Bank published an inflation of rate of 12.4 percent, up from less than 10 percent the previous year, prompting alarm from business leaders.
The exchange rate for the Burmese kyat has reached almost 1,300 to the dollar, an almost unprecedented high, exacerbated by Burma’s negative balance of trade.