RANGOON — Burma’s total trade volume has dipped in the first four months of this fiscal year since April compared to the same period last year, alongside a reduction in its trade deficit, while government plans to boost exports face strong economic headwinds.
These headwinds—which industry leaders speculate may frustrate export growth and widen the deficit in the short-term—include very low oil and gas prices, a ban on raw timber exports, attempts to reduce raw jade sales (to promote value-added processing), and shortfalls in agricultural production caused by extreme weather, particularly flooding.
The total trade volume between April and the end of July was worth US$8.071 billion, with $3.275 billion in exports and $4.79 billion in imports, leaving a deficit of $1.5 billion, according to figures from the Ministry of Commerce.
During the same period last year, the total trade volume reached $8.8 billion, with $3.336 billion in exports and $5.486 billion in imports, leaving a deficit of $2.15 billion.
Ministry of Commerce director Myint Cho cited the effects of catastrophic floods in July and August of last year, which laid waste to a proportion of Burma’s paddy fields, in lowering exports. He expected a future rise in imports as foreign investment projects heighten demand for certain materials.
While the government continues to express worry over the trade deficit, Commerce Minister Than Myint has announced plans to triple exports during the term of the current government up to 2020.
In pursuit of this goal, he said the government would target the agricultural sector, small and medium enterprises, and re-export items (goods imported into Burma and re-sold to third countries).
Myat Thin Aung, chairman of the Hlaing Tharyar industrial zone in Rangoon, said that unpredictable weather patterns in Burma may hamper efforts to boost agricultural production, citing the flooding of last year, which has been repeated on a less devastating scale during the current rainy season.
He believed adverse weather would further the trade deficit, given the longtime centrality of the agriculture in Burma’s economy. He also cited low oil and gas prices, the ban on timber exports and efforts to reduce raw jade exports as drivers of the deficit.
Oil and gas, jade and agriculture products are Burma’s major export items, while its chief imports are home appliances and raw industrial materials—now servicing record levels of foreign investment.
“The export volume will definitely decline this year, so I expect the trade deficit will be bigger than last year,” Myat Thin Aung said.
The Ministry of Commerce said it anticipates a total trade volume of $32 billion this fiscal year up till March 31, 2017, although this forecast may be downgraded if current flooding worsens and Burma is hit by more extreme weather. Much of the increase is expected to consist of imports, as foreign investment continues to enter Burma.
Last year, according to the ministry’s figures, the total trade volume reached $26 billion, with a deficit of $5 billion.
Burma’s total trade volume increased steadily year on year after political and economic reforms were launched under former President Thein Sein in 2011. However, in 2015, the last year of Thein Sein’s term, the trade volume leveled off, leaving some observers concerned.
