The World Bank has revised downwards its forecast for Myanmar’s economic growth by 0.5 percentage points to 6.2 percent in the fiscal year 2018-19.
The World Bank East Asia and Pacific economic update released this month downgraded Myanmar’s GDP growth projections from the previous forecast, saying seasonal floods, rising cost, inflationary pressures and the Rakhine crisis would weigh on the economy. The outlook for 2019-20 and 2020-21 was also cut by 0.4 percentage points to 6.5pc and 0.3 percentage points to 6.8pc, respectively.
The Bretton Woods institution said, in the medium term, the country’s growth is expected to pick up as a result of “several investment-friendly laws have been passed and are anticipated to be implemented.” Myanmar implemented its new Investment Law last year and the new Companies law in August.
The revision will make grim reading for the National League for Democracy-led government, which has been criticised at home and abroad for its handling of the economy as it approaches midpoint through its five-year term. Approved FDI for the last six months falls shorts of the government’s own estimates, while tourist numbers in the country has risen by only 2 percent this year. Sectors such as insurance and retail banking remain largely sealed off from foreign players as reforms are mired in inaction.
This has led to domestic and foreign business leaders casting serious doubts on the government’s management of the economy over the last 2.5 years. One domestic businessman warned that “the window is closing” on reforms and an Asian business group criticised Nay Pyi Taw as working “in silos” and having “no urgency to get things done”.
Mandalay International University’s lecturer Pietro Borsano commented that the escalating trade tension is “biting China’s economy” and any turbulence there will significantly affect Myanmar’s outlook.
“Myanmar’s government will find itself in a much more volatile environment in Asia as a whole for years to come, with a lot of uncertainty and instability,” he commented.
The key, he said, is whether Nay Pyi Taw can roll out a business environment sufficiently attractive for those Chinese companies who plan to relocate to Southeast Asia to avoid American tariffs. Factors include infrastructure, labour mobility, logistics costs and regulatory issues.