Myanmar’s positive political developments and structural reform programmes will help foster economic growth and investment, says a new Asian Development Bank report launched on Wednesday.
In its Asian Development Outlook 2016, the ADB forecasts Myanmar’s economic growth to recover to 8.4% in the 2016 fiscal year. The country’s economic growth eased to an estimated 7.2% last fiscal year due to widespread flooding and landslides, Mizzima reported.
Myanmar's current fiscal year ends on March 31, 2017.
“Though economic reforms implemented since 2011 have had positive outcomes, Myanmar’s new government will face the challenges of advancing economic reform, addressing infrastructure and labour shortages, and making progress towards peace and social cohesion,” said Winfried Wicklein, ADB Country Director in Myanmar. “Moreover, intensified efforts are needed to connect and develop rural areas to improve access to markets and services, and to generate opportunities and jobs.”
Foreign direct investment is expected to get a lift from the successful political transition following national elections in November 2015, with investment flowing into newly established special economic zones and rapidly expanding transport, telecommunications, and energy sectors.
Inflation will moderate as agricultural recovery from the floods brings down food prices. But it is estimated to remain high at 9.5% in the 2016 fiscal year, before declining to 8.5% in the 2017 fiscal year.
Risks to Myanmar’s economic outlook include thin external and fiscal buffers, the capacity of the government to maintain reform momentum, ethnic and sectarian tensions, and vulnerability to bad weather.
The report emphasises that Myanmar’s transport infrastructure, after decades of under-investment, provides poor access to markets and services, perpetuates poverty and regional inequality, and hampers business development. The ADB estimates that $60 billion is needed through 2030 to upgrade transport systems to a standard seen in other countries at a similar stage of development.
“This means increasing transport sector investments to the equivalent of 3% to 4% of gross domestic product from little more than 1% in recent years,” said Peter Brimble, ADB Deputy Country Director in Myanmar. “Private sector resources will need to be mobilised given the immense funding requirements.”