publication

Myanmar Economic Monitor, October 2017


Myanmar’s macroeconomic environment over the course of 2016/17 has remained relatively stable, though economic growth is estimated to have slowed to 5.9% from 7% the previous year.

  • Despite notable reforms and strong foreign investment commitments, investment demand decelerated as private investors bided their time pending greater clarity in the government’s economic agenda.
  • Public investments declined, the agriculture sector contracted, and industrial output slowed down due to declining manufacturing production in the first three quarters, and falling gas output.
  • Private consumption, which accounts for close to 50% of GDP, continued to support trading activities particularly in urban areas and durables such as televisions, phones and motorcycles. Rising consumer purchasing power and greater access to markets have contributed to substantial growth in household asset ownership.
  • Tighter economic policies and slowing demand have contributed to an improvement in the overall external position of Myanmar in 2016/17 with an estimated balance of payments surplus of 1.4% up from 0.8% the previous year.
  • Inflation pressures abated over the course of 2016/17 to an average 6.8% compared to 10% in 2015/16 from the food price shock.

Economic Outlook & Policies

  • Economic growth is projected to recover to 6.4% in 2017/18, considering the country’s recent deterioration in security in Rakhine State. The crisis could negatively affect investment flows already affected by investor perceptions of slowing reforms, and reduce resilience to shocks including natural disasters.
  • Public and private investments in priority infrastructure services such as power and transportation are projected to pick up and are central to implementing growing private investment commitments in sectors such as labor intensive manufacturing.
  • Inflation is expected to ease further to 5.2% in 2017/18 but risks include rising energy prices.
  • Accelerating much needed investments in the economy will also require progress on structural reforms in, among other areas, finance, energy, and business regulations. Bringing these together in a comprehensive medium-term economic program with enabling policies, and an implementation plan and reporting could sustain investor confidence.