Tue 8 Oct 2013
Filed under: Business / Trade,News
The World Bank has revised its 2013 economic forecast for Myanmar up to 6.8 percent from 6.5pc following better than expected results in gas production, services and construction.
Myanmar has benefitted from gas exports that reached a record-setting US$4 billion in the 2012/13 fiscal year, surpassing $3.5 billion last year, according to Bank’s East Asia and Pacific Economic Update. Foreign direct investment this year has also risen sharply from 3.7pc to 5.2pc in the same period.
“Gas production is expected to increase significantly, with new fields coming on stream in 2013/14, while many development partners, including the World Bank, are likely to ramp up their support to Myanmar,” the report states.
It also said that exports would improve with Myanmar’s recent reinstatement into the EU’s Generalized System for Preferences for least-developed countries, which will give it duty free access to the lucrative EU market for most goods.
The forecast of 6.8pc GDP growth in 2013 comes after posting an impressive 6.5pc last year. It also echoes last week’s prediction by the Asian Development Bank, who upgraded Myanmar’s GDP outlook from 6.7 to 6.8pc. The government has said it expects the economy to grow by 8.9pc this year.
Despite the optimism, the World Bank also warned of risks that could potentially offset recent gains, including worries about government stability and rapidly growing inflation.
“The outlook remains positive in the short- to medium-term, but there are also challenges, particularly from the political front,” the report states.
“An emerging challenge is likely to be the capacity of the government to remain focused on the economic reform agenda in the run-up to the fast approaching watershed elections in 2015,” it continues.
It also said that where Myanmar enjoyed low inflation rates averaging 2.8pc in 2012/13, an increase in food prices and housing rental costs have sent inflation up to 6pc in December 2012 with indications that it may have reached 7pc in August.
Aung Thura, CEO of locally-based consulting firm Thura Swiss, said the economic growth could be further hindered by the lack of an educated workforce able to implement the flooding of new legislation passing through the Capitol.
“Myanmar doesn’t have experienced people in a lot of areas, so although we are always talking about reforms—and they look good on paper—their implementation will be difficult,” he said.
“The main danger is that so many things are being done at the same time and nothing is being done particularly well, so a better approach might be to slow the process down a bit.”