Myanmar
Date: 10 May 2012
The event will be held in Yangon , Myanmar , with the participation of distinguished participants from academia, government, civil society, international organizations, and the press. The list of well known participants making opening remarks, presentations and commenting on the publication includes:
Winston Set Aung
Economic Advisor to the President
Co-Founder and Director
Asia Development Research Institute
Aung Tun Thet
Senior Adviser
Resident/Humanitarian Coordinator Office
U Tin Htut Oo
Senior Adviser/UN ESCAP
Chief Executive Officer
Agribusiness and Rural Development Consultants
Naylin Oo
Economic Affairs Officer
Macroeconomic Policy and Development Division
United Nations Economic and Social Commission for Asia and the Pacific
Country briefing note <download pdf file>
Economic growth driven by investment; need to be more broad-based
• Myanmar 's economy grew by an estimated 5.3% in 2010 and 5.5% in 2011 (fiscal year beginning in April 2011 and ending in March 2012).
• Growth was driven largely by government spending and fixed investment, with private consumption making a smaller contribution as a sizeable portion of the population live below the national poverty line.
• On the supply side, industry and agriculture continued to expand from previous year levels, while services sector was helped by a 26% growth in tourist arrivals.
• Economic as well as political reforms began to take hold, with a special economic zone enacted in early 2011 and a foreign investment law to be introduced in 2012. The new Government, formed in March 2011, has been initiating consultations with experts and business groups.
• The Government also decided to unify and float the exchange rate in April 2012, after a historic parliamentary election.
• The economy at large, however, still suffers from restrictive measures, such as licensing, which pose barriers to manufacturing and agriculture in gaining access to inputs and equipments.
• In 2012, Myanmar 's economic growth is expected to accelerate to 6.2%, as recent reforms and the expected easing of sanctions help attract greater foreign investment and bilateral and multilateral development assistance.
• Building on recent reform efforts, the country could benefit from a stronger non-resource sector and integration into regional production networks.
• This would have to be accompanied by increased investment in education, health, rural development and infrastructure, particularly in energy as large segments of the population remain without access to modern energy.
Inflationary pressures easing in line with food prices, but administered prices rising
• Driven by high food prices, inflation remained elevated in 2010 and through early 2011, before starting to ease in May of the same year. However, the Government announced a rise of over 30% in petrol prices in January 2012, while electricity prices were increased by 40% in late 2011. Inflation declined substantially from 7.7% in 2010 to 4.2% in 2011, as inflationary pressure from high food prices began to subside in May. Inflation is expected to pick up this year.
• In general, prices have become more stable in recent years, partly because the Government began to finance part of its deficit through Treasury bond issues, rather than relying completely on the central bank to print money.
Fiscal and monetary policies in early stages of transition
• Heavy spending on major projects such as the development of the new capital, Naypyidaw, has resulted in large fiscal deficits in recent years. Estimated fiscal deficit was 5.5% of GDP in 2011, similar to 5.7% in 2010.
• Inefficient state-owned enterprises and large military holding companies also continue to dominate the economy.
• However with recent reforms, budget discussions seem to point to a significant increase in public health and education spending in 2012. Fiscal resources are also needed to expand infrastructure, particularly in energy.
• The tax revenue base remains small, and as such the Government has been borrowing funds from the central bank to support investment projects.
• The central bank decided to cut its main policy rate from 12% to 10% in early 2012.
Exchange rate reform and expected easing of sanctions to help trade and investment
• Current account deficit has been widening in recent years, reaching an estimated 4.3% of GDP in 2011 from 2.2% and 1.3% in 2010 and 2009 respectively. Import growth continues to outpace export growth due to large capital investments.
• The reform of the multiple currency exchange system is expected to help reduce economic distortions and facilitate greater trade and investment.
• Rice output and exports are also expected to benefit from a new government policy of paying slightly above-market prices for paddy rice.
• Foreign investment is led by China , the Republic of Korea and Thailand , particularly in power, petroleum and infrastructure.
• Expected easing of sanctions could help attract greater foreign investment and bilateral and multilateral development assistance in the coming years.
Renewed focus on rural development and poverty reduction is encouraging
• The government announced in 2012 a Rural Development and Poverty Reduction Strategy, which reaffirmed the commitment to lower poverty levels to 16% by 2015, from the current 26%, in line with targets under the Millennium Development Goals.
• The Strategy also identified as priority areas such as agricultural production, livestock and fishery, micro saving and credit institutions, rural cooperative, rural socio-economy, rural energy, and environmental conservation.
• The government has also established a central committee, chaired by the President, to ensure the broad implementation of the Strategy.
Policy brief: Living with high commodity prices <download pdf file>