Myanmar well placed to be mid-income country by 2030, ADB says
Thanks to its geographical advantages, wealth of natural resources and youthful labour force, Myanmar, currently one of the poorest countries in the region, is likely to become a middle-income nation within 18 years, according to Asian Development Bank.
Myanmar could join Asia’s fast-growing economies and expand its gross domestic product by 7-8 per cent a year, becoming a middle-income country by 2030, the ADB said in a report released yesterday in Bangkok.
Its per capita income is set to triple by 2030, if the nation can surmount substantial development challenges by further implementing across-the-board reform.
Myanmar’s strategic location, rich natural resources and abundant labour forces leave it perfectly positioned to prosper from Asia’s dynamic economic growth, said Stephen Groff, ADB’s vice president for East Asia, Southeast Asia and the Pacific.
“Myanmar could be Asia’s next rising star. But for this to happen, there needs to be a firm and lasting commitment to reform,” Groff told a news conference.
The ADB urged Myanmar to reduce the state’s role in production. The bank also suggested that the country diversify into industry and services, while improving agriculture.
Myanmar’s economic outlook in the near term looks bright. The ADB projected GDP growth of 6 per cent this year and 6.3 per cent in 2013.
“Myanmar now is growing but from a low base. Its per capita GDP is among the lowest in Asia,” said Cyn-Young Park, an assistant chief economist of the ADB.
GPD per capita last year was US$857 (Bt27,000), compared with $900 for Cambodia and $1,411 for Vietnam. One in four people is poor, she said.
However, the country has potential to achieve high economic growth of 7-8 per cent annually, similar to China’s experience of double-digit growth rates over decades, Park said.
“Asia is the new economic centre of the world, and Myanmar lies at the centre of Asia,” she said.
The country is expected to take advantage of rising intra-regional trade and investment as Asean will be become a single economic community by 2015.
Myanmar’s youthful population will generate a demographic dividend, but it could also lead to social instability if inequality is not addressed, Park warned.
The 15-28 age cohort currently has 13 million people who are contributing and will continue to contribute their effort and skills to enhancing productivity and competitiveness, said the report.
Myanmar has ample gas, oil, forest, water and agricultural resources. Proven natural-gas reserves total 7.8 trillion cubic feet and gas-fired plants account for 21 per cent of total installed power generation.
ADB’s economists have warned that there are multiple constraints and risks. The country lags far behind others in the region in infrastructure investment. “Only one in four has electricity access,” Park said.
Despite the current doubling of government spending on education and health, it still lags far behind its peers, she said.
Myanmar’s financial sector is very small and kept under tight control. Little private credit is available, at 25 per cent of GDP, below that in most developing Asian countries. By comparison, in Vietnam private credit exceeded 120 per cent of GDP in 2010, said the report.
Park also pointed out that as Myanmar liberalises its economy, it would be vulnerable to greater volatility in capital flows.
She added that significant risks included impacts of climate change, pollution from economic activities, and tension from internal conflicts.