The economic outlook of Myanmar has positioned it among one of the fastest growing economies in the world making it a promising destination for business and commercial investments. The International Monetary Fund’s (IMF) latest report of April 2016 says that Myanmar’s Gross Domestic Product (GDP) – the primary indicator to assess the health of a country’s economy – will grow by 8.6% in 2016. When compared with emerging developing nations in the world, especially Myanmar’s regional neighbours as well as the Association of Southeast Asian Nations (ASEAN), Myanmar projects a robust growth in the years ahead.
Economic facts: Myanmar shines with highest GDP growth
Let’s take a look at GDP projections as well as past financial performance of Myanmar, its regional neighbours and ASEAN. While Myanmar shares its boundaries with Bangladesh, China, India, Laos and Thailand, its other immediate neighbours are Vietnam, Cambodia, and Bhutan. Following are the IMF’s GDP for this year for Myanmar’s regional neighbours – Bangladesh (6.6), Thailand (3.0), Vietnam (6.3), Cambodia (7.0), Laos (7.4) and Bhutan (8.4). The data shows a clear edge that Myanmar has on its regional neighbours.
Though the comparison of Myanmar’s economic growth prospects with India and China may not be fair due to the vast difference in geographical expansions, economic prowess, political maturity and other social factors, the IMF’s real GDP projects put Myanmar even ahead of China and India, which is 6.5 and 7.5 respectively.
Even among ASEAN members – which have come together to accelerate the economic growth and social progress among other issues – Myanmar has been projected to outshine all of them in the coming future. The forecast is based on the past growth rate. For instance, while the average real GDP growth of ASEAN members from 2000 to 2013 was 5.1%, Myanmar’s average real GDP growth for the same period was about 7%. The ten members of ASEAN are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
Since the economic base of these countries including Myanmar is small, they have high growth potential. Experts dispute GDP forecasts. Some economists believe that instead of the only GDP, quality of life and well-being of people should also be measured before deciding economic performance of any country.
What projects makes Myanmar a fastest growing economy?
Experts, who have supported the IMF’s projection of Myanmar as the fastest growing economy in the World, give credit to change of government and some recent economic reforms for this positive forecast. While the change of government has brought optimism and increased confidence of investors and consumers, the rise in exports figure has given a boost to the economy. For instance, in 2014-2015, total foreign trade in Myanmar went up by 16.8 % as compared to 2013-14. Agricultural products, animals, fishing, mining, and forest products have high demand in foreign countries especially in China, Singapore, India, Japan, and Thailand. The Thilawa Special Economic Zone Myanmar is expected to propel export growth in recent future.
Another important factor which has a positive bearing on its economy is the age of its working population which is 46 million out of 60 million total population. Myanmar has abundant natural resources significant reserves of oil, gas, and precious minerals.
Since the economic development is at the early stage here, the country has a vast expansion of unused land which it can use for “fit for purpose” economy to suits its modern need, feel experts.
Challenges for Myanmar
The projection of Myanmar as the fastest growing economy is based on various problems that it has to overcome to capitalize on the said trends. Inequality and poverty have remained a significant problem across the country. The country has to diversify its economy and increase the labor productivity growth twice more than what it is today. According to a recent report, both Indonesia and Myanmar alone have an undersupply of 9 million skilled and 13 million semi-skilled workers by 2030.
Not only that, Myanmar has failed to harness digital technology till now. For instance, while Singapore has the fourth highest smartphone penetration in the world and about 75% of its population is online, only 1% of Myanmar is access to the internet. The government needs to adopt an aggressive telecommunications infrastructure plan.
The next big challenge for Myanmar’s over-dependence on agriculture. Its manufacturing sector is small, almost half the size of Vietnam’s. It needs to shift from agriculture to manufacturing to achieve its desired economic growth. The developed economy did it when they were emerging economy and all emerging economy has already realized the shift from agriculture to manufacturing.
Since the majority of Myanmar’s population live in rural areas, its cities haven’t expanded as expected. The urbanization will benefit regarding investment, infrastructural development and attracting foreign trade. Reports say, the overall investment requirement of Myanmar is $ 650 billion and for that its needs about $170 billion of foreign capital.
There is no denying the fact that Myanmar has everything which it needs to become world’s fastest growing economy. However, proactive steps for investment, manufacturing, foreign trade, infrastructural development, land reforms, finance, foreign direct investments by the government can change the face of the nation.