Myanmar's economy is on track to grow by 6.5% in Fiscal Year 2013 (ending 31 March 2014) and is seen expanding by 6.8% in FY2014. Growth is supported by investor optimism following policy reforms, the reinstatement of Myanmar in the European Union’s Generalized System of Preferences for duty-free and quota-free market access, and a gradual easing of restrictions on financial institutions that facilitates credit to the private sector.
|Selected Economic Indicators (%) - Myanmar||2013||2014|
|ADO 2013||Update||ADO 2013||Update|
|Current Account Balance (share of GDP)||-4.2||-4.4||-4.4||-4.5|
Source: Asian Development Outlook (ADO) 2013 Update; ADB estimates.
Tourist arrivals rose by 36% in the first 2 months of FY2013, and exports of natural gas will increase from the second half of 2013 as production from the Shwe and Zawtika gas fields comes on line. The government awarded telecommunications licenses to two international companies in June and has selected mainly international firms as preferred bidders to develop airports in Yangon and Mandalay. Investor confidence and economic activity will also get fillips from Myanmar hosting the Southeast Asia Games in December 2013 and from its chairing the Association of Southeast Asian Nations in 2014.
Inflation rose to 5.7% year on year in April and May 2013, from around 5% in January-March, largely because of higher food prices. Forecasts in Asian Development Outlook 2013 for average inflation are revised up, reflecting higher domestic food prices and some pass-through to domestic prices of a 10% depreciation of the kyat against the US dollar that occurred from March to August this year. Reduced credit to the government from the central bank should help to contain inflationary pressure over the medium term, supported by a law enacted in July 2013 to grant the central bank more operational autonomy.
Robust growth in exports and tourism earnings are expected to be more than offset by increased imports stemming from higher investment and an easing of foreign exchange restrictions. Forecasts of current account deficits are widened slightly from April. Stepped-up foreign direct investment and official development assistance are expected to keep the overall balance of payments in surplus. Foreign exchange reserves rose to an estimated $4.6 billion at March 2013, equivalent to 3.7 months of imports, and are projected to move higher.
Source: ADB. 2013. Asian Development Outlook 2013 Update. Manila.