IHS Economic Report: Myanmar, Fast & Furious, Excerpts
IHS Research Note:
IHS Global Insight Asia-Pacific Chief Economist Rajiv Biswas’
Asia Letter – Myanmar economy: Fast & Furious, an
assessment of the rapid pace of economic reform in Myanmar
and the medium-term growth outlook, is attached. A brief
summary of Rajiv’s analysis is presented below:
Asia Letter – Myanmar Economy: Fast & Furious
Myanmar’s pace of economic reform since the historic
parliamentary by-elections held in April 2012 has been fast and
furious even by the standards of Asian tiger economies
Asia Pacific Chief Economist
IHS Global Insight
As a result of recent economic reforms and the upsurge in
investor interest in Myanmar, the country’s GDP growth
momentum has accelerated. However, the rapid pace of
economic growth could trigger economic imbalances, notably
risks of high inflation and rising asset prices with a key risk
being from a potential property bubble developing in Yangon
due to surging land and property prices.
Growth: IHS forecasts that Myanmar GDP growth will
strengthen to 6.9 per cent in 2013 and 7.0 per cent in 2014.
Sustained strong economic growth is also forecast for
Myanmar in IHS medium-term economic projections, with
average GDP growth of 7.1 per cent per year forecast over
Oil & Gas Revenues: Oil and gas export revenues are being
boosted by the Shwe and Zawtika gas projects, with new oil
and gas pipelines to southern China completed during 2013.
Myanmar’s gas exports are forecast to rise from USD
3.3billion in fiscal 2011-12 to USD 4.3 billion by fiscal 201314, reaching around 36 per cent of Myanmar’s total exports.
Tourism Gold Rush: In the tourism sector, foreign tourism
arrivals rose by 32.5 per cent in 2012, with further growth of
around 26 per cent year-on-year in the first half of
2013. Large-scale new investment in tourism infrastructure
is committed or planned, including a major new international
airport in Yangon and dozens of new hotels. The new
Myanmar Government Tourism Masterplan aims to lift
annual international tourism visits to 7.5 million by 2020,
driving rapid growth in tourism-related exports and tourismrelated jobs.
Key risks remain, notably the political risks related to the
planned general elections in 2015 as well as from the
sectarian violence between Buddhists and Muslims that has
erupted in some parts of the nation.
Institutional capacity building is needed to address weak
governance standards, with the support of aid and technical
assistance by other governments and multilateral institutions
such as the IMF, World Bank and ADB. Other ASEAN
governments are already playing a key role in such initiatives.
Macroeconomic risks include vulnerability to accelerating
inflationary pressures due to rising wage and other input
costs. A particular concern relates to rapidly escalating real
estate prices as well as rents for commercial and residential
property in Yangon, which has become a major hurdle for
foreign firms’ expansion plans, and could eventually create
risks of a property bubble bursting.
Major bottlenecks to economic development are the lack of
essential infrastructure, such as power, ports, roads and
railways, as well as the poor education system and vocational
Asia-Pacific Chief Economist
IHS Global Insight
7 November 2013