YANGON, Myanmar – The International Monetary Fund said on Thursday that the growth of Myanmar’s economy will suffer a slowdown from 6.8 percent in 2017/2018 to 6.4 percent in 2018/2019 and indicated that it faces risks such as the Rohingya crisis and the trade war between the United States and China.
In a statement, the IMF did not give any reason for the slowdown, but predicted that growth will be maintained near 7 percent in the upcoming years if Myanmar sticks with its economic reforms and improves its efficiency and transparency.
“Economic prospects over the longer term remain favorable on the back of Myanmar’s demographic dividend and strategic location between the global growth engines,” said Shanaka J Peiris, who led the IMF team visit to Myanmar from Nov. 28-Dec. 13.
“To harness this potential, Myanmar will also need to secure peace and stability while managing fiscal risks from large infrastructure projects,” Peiris added.
The IMF expert said that the country had benefited from an increase in exports and recovery in agriculture, but added that it also faces threats such as the Rohingya crisis in Rakhine state.
More than 723,000 members of the Muslim Rohingya community have fled to Bangladesh after a military campaign, prompting accusations of genocide by the United Nations and leading to the European Union warning Myanmar about leaving it out of a trade agreement.
“A prolonged crisis in Rakhine state and a withdrawal of trade preferences could reduce concessional donor financing and investment, leading to lower growth and significant job losses,” Peiris said.
The IMF expert also mentioned other risks such as the restructuring of Myanmar banks, global market volatility, the US-China trade war, an increase in petrol prices and a slowdown in the Chinese economy.
The IMF added that the fiscal deficit grew to 2.7 percent of GDP in 2017/18 and is expected to reach 3.5 percent of GDP in 2018/2019 due to “higher capital spending.”