Bangkok: Myanmar’s economy may grow as much as eight per cent a year over the next decade as inflation remains low and the government increases trade ties with neighbours China and India, according to the Asian Development Bank.
The near-term outlook for the economy, one-tenth the size of neighbouring Thailand, is “relatively upbeat” because of higher foreign investment and commodity sales, the ADB said in a report on Monday. Annual growth of eight per cent may triple per capita gross domestic product to $3,000 (Dh11,019) by 2030, it said.
“Myanmar has rich natural resources, a plentiful youth population and a strategic location in the region,” said Cyn-Young Park, the ADB’s assistant chief economist, who co-wrote the report. “All these will help Myanmar achieve very strong and inclusive growth in a fairly short time.”
Myanmar President Thein Sein has taken steps to modernise the economy and allow greater political freedoms since taking power last year, prompting Western nations to ease sanctions and attracting companies such as Coca-Cola and Visa. He is seeking to create jobs before national elections in 2015.
The government should “urgently” develop the agricultural sector, which employs almost two-thirds of Myanmar’s workforce, Park said. About 20 per cent of the country’s land area is used to grow crops, and about a fifth of that is irrigated, according to the ADB.
“The potential of exploiting its own agricultural resources to improve productivity is enormous,” Park said. “This is the low-hanging fruit for the country which can benefit a large population in a very short time period.”
Risks to Myanmar’s growth outlook include weak macro-economic management, inadequate infrastructure and low tax revenues. About a quarter of the population has access to electricity and broadband internet connections are sparse, the report said.
While a law passed last month gives the central bank more autonomy, policy makers will face challenges to keep the currency stable and inflation under control as more money flows into the country, the ADB said. Myanmar abandoned a fixed exchange rate in April and is taking steps to loosen restrictions on capital flows.
“Maintaining macro-stability is going to be the key at least over the medium term for the country,” Park said. “The central bank needs to be stronger and stay rather independent in terms of monetary operations and fiscal management.”