Economic Outlook: World Bank Forecasts Myanmar To Grow To 7.8% In 2016

The World Bank on Wednesday said growth in East Asia and Pacific, including Myanmar, is forecast to remain resilient over the next three years, according to its recent report. 

In Myanmar, economic growth this fiscal year remains robust but high inflation continues to persist. The country’s economy is projected to grow to 7.8% this period, but inflation will remain at 8.5%. 

Speaking at a teleconference from Washington D.C., Chief Economist of World Bank in East Asia and Pacific, Sudhir Shetty, advised Myanmar to take appropriate fiscal policies that can manage high inflation, which may affect investment sentiments and decisions. 

CHIEF ECONOMIST, WORLD BANK EAST ASIA AND PACIFIC, SUDHIR SHETTY : “…Myanmar in particular needs to take any tendency to inflation very seriously and try to address it. And in the case of Myanmar, I think it is largely around having appropriate fiscal and monetary policies in place that can address these inflation tendencies." 

Inflation in the country was at its peak in October last year due to supply shock when food prices were high, following the devastation of cyclone Komen in Myanmar’ agricultural lands, according to World Bank Economist for Myanmar Habib Rab. Other factors that maintained the high inflation in the last 12 to 18 months include demand pressures in the economy such as rapidly growing public sector, increase in budget deficit due to external shocks, and Central Bank financing. 

Aside from introducing efficient policies on the supply side, Rab suggests the government ensure prudent monetary policies. 

ECONOMIST, WORLD BANK MYANMAR , HABIB RAB : “… you know, increased monetary policy to manage the increased liquidity in the market. So, the types of reforms that were introduced in September for example, the Treasury bond auctions are one way of managing liquidity in the market. So, instead of Central Bank financing, which increases liquidity, you have Treasury bond options which mop up liquidity for priority government expenditures. So that is one. Of course, fiscal discipline is another one. Managing rapid credit growth in the economy is a third policy area that can tackle through adoption of credential regulations…” 

Overall, Myanmar is projected to perform well, with Rab naming agriculture, services, manufacturing and supporting sectors like logistics, transportation and distribution as main drivers of economic growth.