Myanmar needs to accelerate economic reforms to sustain growth: ADB

Presenting an optimistic growth outlook for the current fiscal and the coming years, ADB urges government of Myanmar to continue focusing on economic reforms, particularly in the areas of public finance management, legal and regulatory frameworks and governance and accountability.

Pointing out the need for prudent use of scarce resources for infrastructure and skill development in the economy, the ADB points out the need to further enhance domestic resource mobilization. Legal and regulatory reforms need to be undertaken to enhance investor confidence and competitive investment climate in the country. PFM management has to reflect the measures towards transparency and accountability, meeting the global standards of audits and accounting.

The need for integration of Myanmar in the global and regional value chain for sustained economic growth is emphasized in the Myanmar chapter of the Asian Development Outlook 2019 of ADB, which was released at a press conference in Yangon this week.

Speaking on the occasion, Niwin Sinsiri, Country Director of ADB Myanmar Resident Mission, pointed out that Asian Development Outlook provides an upbeat outlook for Myanmar in terms of growth recovery and it can be sustained only through continued focus on economic reforms.

Pointing out the fact that Myanmar has to enhance its resilience capacity to disasters, he observed that poor and the marginalized people get affected disproportionately in disasters. Economic forecast and policies have to accommodate the potential consequences of disasters that hinder the attainment of growth potential of the economy. Thus, disaster risk management is a critical factor in Myanmar’s economic development story.

Presenting detailed picture of the situation of the economy on various parameters like sectoral growth, fiscal deficit, trade, inflation, and exchange rate, Principal Country Specialist and the author of Myanmar chapter of Asian Development Outlook 2019, MsYumiko Tamura pointed out that stable situation of FDI in terms of approvals and also inflows point out that external players, particularly from Asian countries are identifying Myanmar as a destination for investment. Further reforms on this front are expected to accelerate FDI inflows in the near term. A positive trend on foreign and domestic investments front, would also result in consumption growth and the overall growth of the economy.

Pointing out that the growth would be bullish in the coming two fiscals, she pointed out a turn-around of agriculture sector and improved domestic and foreign investments in the secondary sector as contributors to the potential growth. Services sector may see a dip, due to the saturation of telecom sector, though growth can be seen in financial services, trade and transport and tourism.

An area of concern however for the economy is on inflation front, which as per ADB assessment, would continue along with faster growth. This infact would diminish the benefits of growth, especially as inflation hurts the poor the most.

Manageable levels of current account deficit (trade deficit) as well as fiscal deficit are projected, which would mean there would be a macro economic stability in the coming years. The measures on the monetary and fiscal fronts, which are on the expected path, of containing deficit financing by the central bank and also prudence in spending; and moderate (or slow) increase in money supply, all these received support from the ADB in its outlook. All these are supportive to growth.

Pointing out the risks of overall slow down of the global economy, and that of China; and possible EU withdrawal of GSP, ADB outlook emphasises the need for contingency preparation by Myanmar government. Similarly, domestic risks like ethnic tensions may also affect the economy, though in some sectors and in some geographic areas. Accelerating economic reforms and building competitiveness of the economy would be some of the ways towards resilience and preparedness in such situations. The business sentiment would also be a factor that needs to be addressed by the government through sustained and decisive reforms. Given that Myanmar is still receiving concessional overseas development assistance, prudence use of the same for infrastructure development and human capital development (education and technical skills) would lead to enhanced competitiveness of the economy vis a vis peers of the region.

In summary, a positive and upbeat outlook of the economy in the current and next fiscal would definitely be good news for the business and political establishment of the country.

Source: Mizzima

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