Myanmar’s legal exports are still dominated by agricultural products. Source: Asean Economist
Myanmar’s dramatic economic growth appears to be slowing after the boost provided by an influx of US investment has slowed.
The National League for Democracy government that took power last April has produced relatively few economic initiatives with many potential foreign investors waiting for large infrastructure projects to start.
The falling kyat is expected to ensure that 2016 will see the slowest growth in the last five years.
This month’s World Bank’s Global Economic Prospects report highlighted the Burmese slowdown with real-term growth estimated at a still-impressive 6.5 per cent, down 1.3 percentage points from last June’s estimate. The report estimated that real-term growth posted a year-on-year fall for three straight years and fell below 7 per cent for the first time in five years. Myanmar’s 2016 growth rate has now fallen behind that of the Philippines, Laos and Cambodia. The forecast for this year has been revised down by 1.5 points to 6.9 per cent.
The World Bank blamed the faltering real estate market and slow growth of exports. Myanmar’s legal exports are still mainly limited to agricultural goods.
But Seiichiro Sato of DMS, a Myanmar subsidiary of Daiwa Institute of Research Holdings, said the principal reason was declining foreign direct investment (FDI), which drove growth under ex-president Thein Sein.
Myanmar’s Directorate of Investment and Company Administration said between April and December a total of US$3.5 billion in FDI was approved, down 28 per cent on year on year, with the amount for the full financial year likely to post the first drop in four years.
Much of Myanmar’s economy is based on remittances with the United Nations Population Fund (UNFPA) estimating that there are around 4.25 million citizens born in the union now living overseas, based on the 2014 census and projected immigration rates from 1983.
The majority of expats came from border areas like Mon and Kayin states with the largest communities in Thailand and Malaysia, the agency’s report said.
There were 156.3 males per 100 females and 75 per cent of recent migrants to Thailand were aged 15 to 34, the report estimated.
The UNFPA said most domestic migration inside Myanmar was from urban areas largely looking for manufacturing work in Yangon’s factories.
“The findings show that policy makers can help slow urban growth by locating industrial zones outside Yangon. The data also calls for the need for increased and improved housing, utilities and services in the industrial zones,” said Janet Jackson of the UNFPA in Myanmar.