Myanmar’s economy slowly regaining stability and speed: World Bank Report

Services remain the key driver of growth with momentum building in the wholesale and retail sector supported by reforms.

Myanmar’s economy is slowly regaining stability and picking up speed after a volatile 2018, according to a new World Bank report.

The Myanmar Economic Monitor projects Myanmar’s economy to grow at 6.5 percent in 2018/19. Growth continues to be broad-based, supported by the industrial and service sectors. Industrial activities revived, supported by strong performance in the garments sector and construction activities. Services remain the key driver of growth with momentum building in the wholesale and retail sector supported by reforms.

“Acceleration of the reform agenda as envisioned in the Myanmar Sustainable Development Plan, along with targeted public investments and private sector participation, will lead to a consolidation of macroeconomic stability and help Myanmar maintain its positive momentum and meet its long-term growth targets,” said Ellen A. Goldstein, Director for Myanmar, Cambodia and Lao PDR, World Bank Myanmar.

With growth expected to rise to 6.7 percent in 2020/21, the World Bank report projects a positive outlook for Myanmar’s economy despite a deteriorating global environment, due to accelerated implementation of reforms, infrastructure spending and investment in sectors such as wholesale and retail, insurance and banking that are undergoing liberalization.

Inflation is expected to stabilize at 6.6 percent in the medium term. The report notes that inflationary pressures could increase due to volatile global energy prices and the possibility that the government may increases electricity tariffs to bring them in line with the cost of power production.

“There are signs that market sentiment is rising as new laws are being passed,” said Hans Anand Beck, Lead Economist, World Bank Myanmar. “Building reform momentum now is critical by implementing for instance insurance liberalization, tax reform, and transparent investments in the power sector.”

In addition to the regular economic review and outlook, the report features deeper topical analyses on the power sector and multidimensional welfare.

In the power sector, the report argues that Myanmar needs to invest twice as much and implement projects three times faster to meet growing demand. Investments should be informed by least-cost planning and facilitated by higher electricity tariffs and measures to reduce the cost of system inefficiencies.

The Multidimensional Welfare Indicator (MDI), prepared with the government, indicates that most of the population in Myanmar faces overlapping disadvantages, with large disparities in welfare apparent across states and regions, as well as at the township level. Only 16 percent of the population have no disadvantage on any of the 14 selected indicators in education, employment, health, water and sanitation, housing, and assets. Nearly half (47 percent) of the population presents a disadvantage in at least three indicators and more than one-fifth (22 percent) in five or more indicators. The MDI is already being used to help target public resources and aid flows toward those who need it the most, with more effective interventions.

The Myanmar Economic Monitor is a biannual analysis of economic developments, economic prospects and policy priorities in Myanmar. The publication draws on available data reported by the Government of Myanmar and additional information collected as part of the World Bank Group’s regular economic monitoring and policy dialogue.