Last updated: February 2014
Myanmar is currently on a triple transition – from an authoritarian military system to democratic governance, from a centrally directed economy to a market-oriented economy, and from 60 years of conflict to peace in its border areas. These transitions have the potential to create opportunity and shared prosperity for the people of Myanmar and for the country to resume its place as one of the most dynamic economies in Asia.
As the largest country in mainland Southeast Asia, Myanmar has one of the lowest population densities in the region, with fertile lands, significant untapped agricultural potential and a rich endowment of natural resources. Its geographic location at the intersection of China and India, two of the world’s most dynamic economies, makes it well positioned to resume its traditional role as a regional trading hub and a key supplier of minerals, natural gas and agricultural produce.
Since 2010, the government has embarked on an ambitious economic, political and governance reform program. It has begun a series of reforms to remove economic distortions, such as floating the currency, new fiscal regulations to rationalize personal income tax and reduce consumption tax, liberalizing the telecommunications sector, reforms aimed at developing the private sector and stimulating direct foreign investments, a review of the financial sector, promotion of access to finance, and creating an environment conducive to job creation.
These reforms are starting to pay off. Myanmar's economy grew at 7.3 percent in 2012/13. The main drivers of growth were increased gas production, services, construction, foreign direct investment, and strong commodity exports. The economy is projected to grow at 7.5 percent in 2013/14 and rising to 7.8 percent in the medium term owing to continued increase in gas production, increased trade and stronger performance in agriculture.
Despite this recent positive economic performance, Myanmar faces a number of challenges. It is one of the poorest countries in East Asia and the Pacific, with an estimated GDP per capita of $868 in 2012/13 and a poverty headcount of 26 percent, according to a 2010 national household survey. The country’s GDP is estimated to have been $55 billion in 2012/13.
Once the top exporter of rice in the world, Myanmar’s rice exports now account for a negligible share of the world market. Myanmar’s exports of natural resources such as gas and gems are becoming increasingly significant.
Most social indicators are very low. For example, 32 percent of children under five suffer from malnutrition. Limited access to and the poor state of infrastructure are major impediments to providing basic health and education services and for economic development. Almost half the roads are not passable during the monsoon season.
Telecommunications and internet access is also very limited. About 73 percent of the population lacks access to electricity, and the consumption of electricity is one of the lowest in the world – 20 times less than the world average. Existing power infrastructure can only meet about half of the current demand, resulting in frequent blackouts and rationing of the electricity supply. Access to drinking water is also limited in many areas.