VI - ECONOMIC OUTLOOK Myanmar 1994-95

Summary

The Myanmar economy, according to official sources, grew by an impressive 10.9 per cent during the period 1992-93. As this rate I is derived from provisional data, it is more likely that real growth was between 7 and 8 per cent. Much of this good performance can be attributed to a 15 per cent growth in the agricultural sector brought about by increases in cultivated area and good weather. This is also partly explained by mobilization of the public sector for more efficient operations. Furthermore, the high growth rate is also partly a function of the low base from which economic growth has been moving forth. Although a recovery is under way, the gross domestic product (GDP) in real terms is still smaller (54,170 million kyats) in 1992-93 than it was (55,989 million kyats) in 1985-86.

Most of the economic sectors … have achieved double-digit growth. … Nonetheless, this recovery was marred by high inflation and a continuing government deficit.

Most of the economic sectors, with the exception of services, have achieved double-digit growth. The power sector grew by 17.2 per cent, mining by 15.5 per cent, and processing and manufacturing by 13.7 per cent. Nonetheless, this recovery was marred by high inflation and a continuing government deficit. Both these trends have been fuelled by a rapid rise in money supply of around 40 per cent each year since 1990. This has been accompanied by an overvalued exchange rate, which pegs the kyat at over twenty times the market rate. Prices for consumer goods rose significantly and confidence in the currency has been waning. While official consumer price index (CPI) figures indicate a 22 per cent rise in 1992-93, unofficial sources peg the increase at around 70 per cent. More unsettling has been the disclosure that some cities in Upper Myanmar have begun to import lowprice rice from China especially since Myanmar used to be the rice bowl of Asia. While 1992-93 appears to have been a period of unprecedented high growth it remains to be seen whether this can be sustained.