YANGON — Myanmar’s GDP growth rate jumped from 5.9 to 6.8 percent last year on the back of a strong agriculture sector, export growth and robust private consumption, the Asian Development Bank (ADB) said in its Asian Development Outlook 2018.
It expects the economy to maintain that pace through this year and even top 7 percent by 2019, so long as the government can manage reforms to improve the business environment.
According to the ADB, last year’s economic acceleration was aided by a turnaround in agriculture thanks to better weather and the highest rice exports Myanmar has seen in half a century. International demand for the country’s garments also stayed strong last year, while tourist arrivals grew 18 percent to 3.4 million visitors.
It noted that the latest outbreak of violence in northern Rakhine State, which has driven some 700,000 Rohingya to neighboring Bangladesh in search of refuge since late August, has had little economic effect so far.
But it said investment growth may have softened as investors awaited clarity on a pending company law.
Looking ahead, the ADB expects the agriculture sector, which accounts for 30 percent of the country’s GDP, to continue to pick up pace if drought conditions remain at bay.
It said exports would also continue to grow, but not as fast as imports, owing to continued Foreign Direct Investment (FDI) and the huge demand for public investment in infrastructure. Combined with rising oil prices, Myanmar’s current account deficit is forecast to keep growing and hit 5.5 percent of GDP by 2019.
All told, the ADB forecasts the country’s GDP growth rate to reach 7.2 percent next year, but warned that continued growth would depend on a full suite of reforms.
“The positive economic outlook depends on Myanmar augmenting limited public resources by effectively engaging development partners, foreign investors, and the domestic private sector to help finance its staggering infrastructure requirements, narrow regional socioeconomic disparities, and support the long-term development agenda. This will require legal, regulatory and institutional reform to create a more enabling environment for doing business,” it said.
“Although measures have been introduced to deepen the capital market and better regulate banks, a substantial agenda of economic, social and institutional reform remains.”
The ADB said Myanmar’s youthful workforce would continue to attract FDI to labor-intensive, export-oriented industries but added with concern that the government’s FDI regulations were, despite some recent liberalization, still more restrictive than most of its peer economies in the region.
“Encouragingly, progress in December 2017 toward enacting a new company law can assure foreign investors that corporate reform will continue,” the bank said.
“Similarly, a government initiative to formulate a 238-point economic policy agenda, set out in the draft Myanmar Sustainable Development Plan, should keep investors engaged.
“Building on these initiatives, policy makers should implement reform expeditiously and effectively to buoy investor confidence and attract sizable FDI in the years to come.”