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Economic Review of the Past Two Years

Myanmar Insider has published economic review of the past two years online based o n k e y s e c o n d a r y statistics. The review could also been seen as an independent assessment of the economic performance of the current NLD administration. The survey fndings are as follows:

C o n c e r n i n g w i t h t h e G D P g r o w t h , Myanmar economy has taken a dive after dive since the high of 2013. International Monetary Fund (IMF) expects the economy to pick up this year, yet the ground sentiment (based on MI quarterly economic sentiment survey) is not very encouraging. The estimates for the year just ended has put the GDP at 7.2% growth rate, which is hardly suffcient for a country putting on jet engines to catch up with the rest of the ASEAN. The relationship between the economic growth and FDI cannot be understated as we can see from the FDI chart. Reduced FDI is seen in the past two years. FDI is the key to economic growth and NLD government is now beginning to realize that. In recent government-business meetings in April, the government mentioned the initiation of a process of even going overseas to purposely persuade foreign companies to come and invest in Myanmar. Yet, caution is advised as neither State Counselor three missions for Myanmar or the new President eight goals do not include any economic agenda.

Exports are up in the current year, which is a good sign, helping stall the exchange rate increases and slightly offsetting the FDI dive. Yet, exports still have not reached back the level of 2014/15 fnancial year. At the same time, tourist arrivals still have not recovered yet. Even with the Myanmar Tourism Association asking for casino licenses, it is doubtful if the arrivals number will go up. Tourism being one of the key sectors to push Myanmar economy forward, this continued drop should be quite alarming for the government.

Infation is down, with the slower GDP growth. With the reduced infationary pressures, the exchange rate is somewhat controlled. It may not be the time to be overly exuberant as the lower infation rates may be the result of actual or potential reduction in aggregate demand rather than the government being able to put it under control. Exchange rates have somewhat stabilized, bring a sigh of relief for most Myanmar businesses and people, relying most of the manufactured goods on imports.

C a r p r i c e s h a v e gone up in the past two years. Owning a car is less affordable now than two years ago. Gold prices have also gone up in Kyats terms, reflecting the w e a k e n i n g o f t h e currency over the past two years.

Myanmar Insider have included another trend for review this time round, analyzing the number of companies in operations, based upon DICA statistics. Numbers of active companies as well as start-ups have fallen, representing an overall pessimistic business outlook. Despite the government is putting enormous efforts on tax collecting and increasing tax revenues, the overall income tax collected has not substantially increased. Income tax revenues are correlated with the profts of the previous years and we can deduce that overall business profits has not increased in the recent past years.