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Can Myanmar sustain growth momentum?

YANGON — The World Bank’s forecast on Jan. 30 that Myanmar’s economy will grow by more than 7% annually for the next three years might appear to be overly optimistic.

In the latest issue of its Myanmar Economic Monitor, the World Bank said that while growth would most likely be around 6.5% for fiscal year 2017 (ending March 31), it would then accelerate on increased investment in infrastructure and sectors such as hospitality. The adverse effects of floods in 2015 would wear off, particularly in the agricultural sector, which accounts for about 60% of the workforce and nearly 40% of the economy.

In 2015/16, the final year of the previous administration headed by President Thein Sein, Myanmar’s annual growth was 7.3% — a significant increase from the 5.5% reached in 2011/12, the first year of Thein Sein’s presidency.

“The World Bank forecast is somewhat at odds with the mood in the local business community,” said Stuart Larkin, a Yangon-based economic consultant. A prominent Myanmar economist, who asked not to be identified, said that while the World Bank’s growth estimate would be achievable if local and global economic conditions were favorable, a slightly lower growth rate is more likely.

Sean Turnell, an adviser to the ruling National League for Democracy party and an economist at Australia’s Macquarie University, said that slowing global growth, particularly in China and Thailand, would likely affect economic prospects in Myanmar.

“Global growth is slowing, but even more so amongst Myanmar’s principal trading and investment partners,” Turnell said.

China and Thailand accounted for 63% of Myanmar’s exports and 60% of its imports in 2015. China was the biggest foreign investor in Myanmar, while Thailand came third after Singapore, according to data published by the Directorate of Investment and Company Administration, a Myanmar government agency.

But Thailand’s economic growth slowed from nearly 7% in 2012 to less than 1% in 2014, when the army seized power, before recovering to 2.8% in 2015. Chinese growth was the lowest in 26 years in 2016 at 6.7%. Economists frequently question the veracity of China’s economic data, but this figure still represents a colossal expansion in absolute terms, as the mainland is the world’s second biggest economy after the U.S.

Uncertainty about Myanmar’s growth prospects has increased with U.S. President Donald Trump’s criticism of globalization and free trade, and his demands for U.S. companies to invest and produce at home.

Source: Nikkei Asian Review

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