How Is Myanmar's Economy Shaping Up for 2019?

Myanmar is mainly in the news for its internal ethnic conflict and humanitarian abuses. Much less frequently covered is its economic outlook, which might be in part because its economy is the 70th largest in the world. Whatever the reason, I would like to give it some coverage here, especially in light of the IMF's Article IV Consultation on Myanmar that was released last week.

While one could think of economic health and civil liberties as separate, the fact of the matter is there is some linkage. Yes, there has been some progress on refugee repatriation, although freedom of movement of returnees has been limited. This stalled progress decreases positive foreign sentiment, which has an impact on foreign investment in Myanmar (IMF, p. 4). Not only has manufacturing declined since mid-2018, but so have tourist receipts and consumer goods (IMF, p. 5). In spite of some of the shorter-term issues, the IMF is still optimistic about longer-term outlook because of demographics and its commerce with China, India, and Japan (IMF, p. 6).

The World Bank had similar mixed outlook per its December 2018 Myanmar Economic Monitor. The World Bank has concerns with declining foreign direct investment along with global risks being entangled with domestic risks. Nevertheless, services sector liberalization and the loosening on foreign bank lending provides World Bank with a more optimistic medium-term outlook. Even so, Myanmar is dealing with an agricultural sector with stunted infrastructure (which is significant because nearly 70 percent of Burmese work in that sector), and its garment industry might lose the European Union's generalized scheme of benefits (GSB) preference, which would be significant since its productivity in the garment sector was reducing its deficit. Growth in the tourism and transportation sectors have also slowed for Myanmar.

As some additional notes, the Asian Development Bank is anticipating 6.6 percent GDP growth for Myanmar, which is higher than its Southeast Asian peers. Oil and gas reserves at Myanmar's offshore banks are now approved for commercial activity. Myanmar also launched its updated Companies Law in August 2018, which had not been updated for nearly a century. This Law will allow for easier foreign capital flow.

If we're looking strictly at GDP growth, things look good for Myanmar. However, an economy is more than its GDP. With a developing economy that could be easily shaken by global events, I am concerned about such potential issues as Brexit. It makes prognosticating an overall direction more difficult. If Myanmar can get past its internal conflict and improve growth in key sectors, I think that Myanmar can expect an increasingly healthy economy.