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publication December 13, 2018

Myanmar Economic Monitor December 2018


Key Findings

Although Myanmar maintains relatively strong growth momentum by global and regional standards, macroeconomic volatility has intensified as the country continues to navigate significant uncertainty and risks at home and abroad.

  • Real GDP is projected to moderate to 6.2 percent in 2018/19 from 6.8 percent in 2017/18. Agriculture growth strong and stable at 1.2 percent and some service sub-sectors like telecommunications growing strongly.  This is offset by slowing growth in manufacturing, construction and transport sectors driven by slowing growth in investments, higher production costs and weakening domestic demand.
  • The Kyat depreciated 18 percent against the USD between April and October, having an impact on inflation, which is expected to climb to 8.8 percent in 2018/19 from 5.4 percent in 2017/18.

Economic outlook and risks

  • The medium-term macroeconomic outlook projects a recovery to 6.6 percent by 2020/21, driven by an expected pickup in foreign and domestic investment responding to recent policy measures.
  • The policy intent was reflected in the following measures: the opening of retail and wholesale sectors, services sector liberalization, loosening restrictions on foreign bank lending and continued implementation of the Companies Act.
  • There are elevated downside risks from intensifying impacts of the Rakhine crisis (such as the possible repeal of the Generalized Scheme of Preferences by the European Union), pressure from macroeconomic imbalances and possible slowdown in global growth.
  • Fiscal expansion underway, and more could be done with fiscal space, driven by under execution of the budget. Deficit expected to increase to 4-4.5 percent in next two years, from 2.7 percent of GDP in 2017/18.