Myanmar's economic growth declines to 7 percent
According to the economic monitor, the country's economic growth was 8.5 percent in 2014-15. The descending of growth was due to the agriculture supply shock from heavy flooding, a slowdown in new investment during the 2015 election year and lower commodity prices affecting Myanmar's main exports.
The export declined by 12 percent in the first three quarters of 2015-16 compared with the same period the previous year and it contributed to a growing trade deficit. In fact, the local exchange rate has been put pressure on.
Ongoing structural constraints, short-term exchange rate pressures, rising inflation peaking at 16 percent in October 2015, and the political transition have contributed to a deceleration in new investment flows.
Abdoulaye Seck, the World Bank's Country Manager for Myanmar, said that the country's growth prospects are positive if the government structural reforms and macroeconomy are stable.
The country's real GDP growth is projected to rise to 7.8 percent in 2016-17 and average 8.2 percent per year over the medium-term, as the economy recovers from the supply shock in 2015-2016. Moreover, the private investments begin to pick up again.
The agriculture sector is projected to bounce back over the short term while the investors' demand for services and infrastructure construction are expected to be the main drivers of growth.
Mathew Verghis, World Bank's manager for the East Asia and Pacific Macro-Fiscal Practice, said that ongoing revenue administration policy reforms with more effective spending are expected to contribute to macroeconomic stability in Myanmar.
Meanwhile, the country's inflation rate is projected to reach 8.5 percent at average over the course of 2016-17. The Union Budget deficit is projected to average 3.5 percent of GDP over the medium term with the ascending of government's revenue which could rise to around 14 percent of GDP by the fiscal year 2017-18. ■