Myanmar is emerging from five decades of isolation - both economically and politically. With its rich natural resources and strategic location, the country shows good potential for growth. Myanmar could become one of the next rising stars in Asia if it can successfully leverage its rich endowments—such as its natural resources, labor force, and geographic advantage—for economic development and growth.
Myanmar is making brave new moves, as did many of the region’s high growth and transition economies decades earlier. It is opening up to trade, encouraging foreign investment, and deepening its financial sector. Knowing the history of rapid growth in the region can help guide Myanmar in making the critical decisions to achieve its medium-and long-term goals.
The near-term outlook for Myanmar’s economy is relatively upbeat on the back of strong export earnings from resource commodities and a pick-up in FDI flows. The Asian Development Bank (ADB) forecasts that Myanmar’s gross domestic product (GDP) is likely to grow by 6.3% in 2013 (ADB 2012b). Inflation has been brought down to a single digit and fiscal deficits are being kept at 4%-6% of GDP. With hard-earned macroeconomic stability, Myanmar’s growth performance may well exceed expectations in the foreseeable horizon. During their high-growth periods, Myanmar’s regional peers grew at 6%–10% per year, reducing their poverty by as much as 50% in one decade (Table 2). If Myanmar’s development follows this pattern, the country could grow at 7%–8% every year for an extended period. At such growth rates, its GDP per capita would reach $2,000–$3,000 by 2030—more than 3 times the current level—propelling Myanmar safely into the ranks of the middle income countries.
Myanmar reported impressive GDP growth rates, averaging 10.2% during 1992–2010 and 12.2% during 2000–2010 However, these official growth figures have been deemed overstated and rather unreliable given the country’s poor statistical capacity and use of outdated methodologies The International Monetary Fund (IMF) Article IV Mission of January 2012 estimated GDP growth to be substantially lower, averaging 4.6% during 2002–2010 and picking up to exceed 5.0% in 2009–2010 (IMF 2012). Various production indicators—presumably correlated with GDP growth—also suggest that Myanmar’s economic growth may have been weaker than official government estimates. For example, electricity sales (in kilowatt hours) to households and commercial premises grew on average by 4.5% per annum during 2002–2009 and cement sales by 1.8% per annum during 2004–2009 (CSO 2010).
Did You Know?
Myanmar is very rich in natural resources like petroleum, timber, tin, antimony, zinc, copper, tungsten, lead, coal, some marble, limestone, precious stones, natural gas and hydropower.