YANGON — Although Myanmar’s GDP growth has fallen to 1.8 percent due to the effects of COVID-19, the Asian Development Bank (ADB) has reported that growth is forecast to bounce back to 6 percent in 2021.
The bank’s Wellness in Worrying Times: Asian Development Outlook 2020 forecasts Myanmar’s GDP growth for the fiscal year ending Sept. 30 will fall by more than a half due to COVID-19.
However, the projected GDP would bounce back almost as dramatically, ADB said.
It said growth will be supported by a stable performance in agriculture, higher government spending and expansion in the telecommunications sector.
ADB reported Myanmar’s GDP growth at 6.7 percent in the last fiscal year before falling to 4.2 percent in April and 1.8 percent since June.
Since March, Myanmar’s economy has significantly slowed down due to travel restrictions and supply chain blockages. The garment industry, small- and medium-sized enterprises, hotel and tourism and trade have been hit badly by the pandemic.
The tourism industry has been severely affected since April. From October 2019 to July 2020, international tourist arrivals fell by 60.7 percent year on year, said ADB.
It said manufacturing, especially garment production, has been affected in both demand and supplies. Cuts in new orders, supply delays and reduction of the workforce pushed the purchasing managers’ index down in April to the lowest reading recorded, the report said.
It said agriculture is less effected by COVID-19 than other sectors and has been supported by strong domestic and international demand.
“Growth in agricultural exports — mainly rice, beans and other pulses — accelerated by 19.5 percent in the first three quarters of the current fiscal year, from October 2019 to June 2020, over the same period of the previous fiscal year,” it said.
However, the bank warned that exposure to extreme weather, such as flooding, still poses risks to growth.
It reported on the sharp contraction in the garment industry as manufacturing exports in the first three quarters of the fiscal year dropped year on year by 4.4 percent.
However, merchandise exports rose year on year by 2.7 percent in US dollar terms in the first half of the fiscal year, largely supported by agricultural exports, it said.
The bank said imports increased by 9.2 percent, largely driven by investment in government infrastructure projects, widening the trade deficit to US$1.8 billion (2.4 trillion kyats).
It said the approval of foreign direct investment rose to $4.3 billion (5.7 trillion kyats) in June from $3.2 billion (4.2 trillion kyats) in the same period last year. It said electricity projects, real estate development and manufacturing remained attractive to foreign investors.
The Ministry of Investment and Foreign Economic Relations’ investment target for the fiscal year is $5.8 billion (8 trillion kyats).
However, the ADB warned, “future investment inflows could disappoint expectations due to downside risks from the global economy”.
ABD said from October 2019 to June, inflation fell to 7.5 percent from 7.9 percent a year earlier, due to lower commodity prices and subdued demand.
It forecast the inflation rate would fall for this fiscal year and the next year due to weak domestic demand.
You may also like these stories:
Two-Thirds of Myanmar Businesses Struggle to Survive Pandemic: Survey
Singapore Airlines Group Slashes 4,300 Jobs Due to Impact of COVID-19
World Bank: Myanmar Economy to See Growth Drop by 6.3% This Fiscal Year Due to COVID-19
