A new report from the Asian Development Bank (ADB) suggests that Myanmar will be the fastest growing economy in the Asia-Pacific (APAC) region in 2016. Htet Tayza comments.
Figures quoted by Property Report, a real estate industry portal, suggest that key sectors of Myanmar’s economy are thriving. For instance, Myanmar is building up a lucrative tourism industry. Tourist arrivals in the South-East Asian nation climbed to 4.7m in 2015, with tourist spending increasing by 19% to hit US$2.1bn within the same period.
Meanwhile, Myanmar’s profitable garments industry saw exports hit US$2bn in 2015, rising by 28%. Consequently, Myanmar has become an attractive prospect for foreign investors. Data from government agency the Directorate of Investments and Company Administration shows that Myanmar’s foreign direct investment reached US$9.4bn in 2015.
Myanmar has not seen its gross domestic product (GDP – the broadest measure of economic growth) expansion fall below 6% per year since 2012. Yet disaster stuck in 2015; the country experienced an intense three month monsoon period. Exacerbated by cyclone Komen, this devastated Myanmar’s lucrative agricultural sector, ravaging “one fifth of all cultivated land” according to the ADB.
In its latest Asian Development Outlook report, the ADB estimates that this natural disaster shaved US$1.5bn, or 3% of GDP, from Myanmar’s economy. Agriculture accounts for 30% of the nation’s GDP and 60% of employment. Yet as previously suggested, intense monsoons did not halt progress in other areas in Myanmar’s economy, which expanded by 7.2% in the 2015 – 2016 fiscal year.
The ADB notes that “the country pulled together, and worked with its international partners, including the ADB, to rebuild devastated areas and provide relief to affected people. The storm did little to slow down the rest of the booming economy.” The ADB estimated that Myanmar’s economy will grow by 8.3% over the coming year, expanding more rapidly than any other APAC economy.
However, the organisation notes that “despite the strong growth, Myanmar is facing significant economic challenges.” The ADB explained that the nation’s economy is “narrowly-based,” with its expansion dependent on “natural resource exports, construction, and tourism” which makes it somewhat vulnerable to events such as natural disasters. Infrastructure was cited as another issue, with the ADB arguing that Myanmar needs to modernise infrastructure to aid economic growth.
Htet Tayza’s commentary
The ADB’s latest report echoes the findings of a recent paper from the World Bank. The organisation argued that if Myanmar implements effective policy decisions, the nation could record economic expansion of 8% in real terms throughout the next five years. The World Bank’s policy suggestions included “the further opening and diversification of the economy, with a level playing field for the private sector and structural shifts to more productive and labour intensive activities.”
Recently, Myanmar released its new 20 year development plan, which plots out how the country will open up and diversify its economy over the next two decades. These plans include raising FDI to US$140bn by 2030, bolstering its industrial sector to attract FDI and facilitating infrastructural and sustainable development, among other things. Myanmar also recently further opened up its economy to international investors by amending its foreign investment law. With Myanmar continually implementing the policies needed to aid economic reform and expansion, there are reasonable grounds to support the ADB’s claim that it will be the fastest growing APAC economy this year.