In November 2017 an International Monetary Fund (IMF) team visited Myanmar. We include some of their key findings and some comments on 2017 from those working in Myanmar.
There are end-of-Mission press releases following IMF visits. These offer preliminary findings and the views of IMF staff. The IMF confirms that:-
Myanmar’s economy is rebounding and macroeconomic imbalances are stabilising; growth is expected to rebound to 6.7 percent in 2017/18.
The medium-term outlook remains favourable, albeit moderately weaker than previously anticipated and with greater downside risks.
A second wave of reforms is needed to accelerate the growth momentum and foster inclusion, anchored on a medium-term economic plan linked to capacity development.
The economy stabilised in 2016/17. The new Government saw a challenging first year with lower than expected growth of 5.9 percent in 2016/17 mainly due to weak agriculture production and exports, and temporary suspension of some construction projects in Yangon.
Current account deficit fell. Inflation moderated to 6.8 percent, and the deficit fell to about 3.9 percent of GDP in 2016/17 from 5.1 percent 2015/16.
Growth is expected to rebound to 6.7 percent in 2017/18. The medium-term macroeconomic outlook remains favorable mainly supported by a recovering agriculture sector and exports.
Higher fiscal spending is anticipated, in the second half of 2017/18, due to buoyant tax revenues and the revenue neutral supplementary budget will also support growth.
Risks are tilted to the downside. The banking sector needs to adjust to important new prudential regulations after a period of rapid credit growth. The internal conflict and humanitarian crisis in Northern Rakhine state could affect development finance and investor sentiment, although the direct economic impact appears to have been largely localised so far.
Additional risks stem mainly from external sources including commodity prices, potentially volatile global financial markets, and exposure to spillovers from China. Flood effects have been moderate this year, but natural disasters remain an ever-present risk. On the upside, implementation of a more detailed strategic reform plan and higher infrastructure investment would raise potential growth.
Myanmar’s initial phase of economic liberalisation led to an impressive growth takeoff and poverty reduction; now a second wave of reforms is needed to sustain the momentum. Reforms should be focused on agriculture, the banking system and gradual interest rate liberalisation, infrastructure, trade, natural resource management and the legal framework, including further opening up the economy to joint foreign ventures (amendments to Companies Act). A well-sequenced second wave of reforms and greater public investment efficiency would help the economy further integrate with global value chains and foster inclusion.
We in FocusCore have heard these calls for a second wave of change. Survey results have indicated a fall in confidence among the business community. Overall figures for respondents with a positive short-term business view fell from 73% to 49%. However, 88% are positive about Myanmar’s medium to long term forecast. This is especially due to the buoyant domestic market and the potential they believe it can deliver. Data from the Asian Development Bank (ADB) data reports that imports of consumer goods grew by 54 percent and intermediate goods by 20 percent for the period April to July 2017.
Peter Beynon, Chairman of the British Chamber of Commerce in Myanmar, was also confident that growth would continue but added, “In order to improve its business environment, The Government needs to accelerate the pace of economic liberalisation. In particular, the executive should focus on promoting a faster liberalisation of sectors such as insurance, banking, non-banking financial institutions and microfinance”.
The business index 2018 of the World Bank, which measures ease of doing business, placed Myanmar 171st out of 190 economies. No change in placing but six of the ten measured categories have improved, confirming that the Government’s changes are being recognised and are effective.
Do not forget The New Companies Law. You may have seen our blogs on this topic. All agree the new law will have a dynamic effect. Its more flexible regulations will stimulate and allow more foreign investment.
We echo the confidence shown, as indeed do our growing list of client companies, for whom we provide corporate services. We assist companies with business permits, company incorporation and staff to obtain all the necessary visas and work permits and guide new entrants into the market.
The on-going positive economic results for Myanmar have been recorded and published and validated by notable organisations. The positive trend has a growing momentum. Call us now to get your company started in Myanmar.
