Country Report Myanmar December 2012

Country Report Myanmar December 2012

Outlook for 2013-17

• The government is expected to maintain its conciliatory stance towards its opponents, including the pro-democracy leader, Aung San Suu Kyi.
• Although members of the opposition National League for Democracy won 43 of the 45 parliamentary by-elections held in April 2012, the military and its allies will remain numerically dominant in the legislature.
• The biggest test of the government's commitment to political reform will be the next general election, which is due in late 2015.
• Progress on political liberalisation is likely to be sufficient to persuade Western governments to lift sanctions in 2013, paving the way for greater capital inflows.
• GDP growth will strengthen to 5.4% in fiscal year 2013/14 (April-March), from an estimated 5% in 2012/13. In 2014/15-2017/18 growth will average 6.7% a year as the removal of sanctions leads to greater foreign investment.
• Annual consumer price inflation is expected to average 6.6% in the forecast period. Strong domestic demand, coupled with the inability of the Central Bank of Myanmar to rein in money supply growth, will keep inflation high.

Review

• The US president, Barack Obama, visited Myanmar on November 18th and gave a nationally televised speech that praised the Burmese government's recent reforms while pressing for further change on a wide range of issues.
• Mr Obama's visit has added to the pressure on the Burmese government to limit the sectarian violence that continues to roil parts of western Myanmar and threatens to undermine the country's reform process.
• Aung San Suu Kyi's latest high-profile foreign trip was to India in November, where she urged the Indian administration to support greater democracy in Myanmar.
• The IMF said in November that it is nearing an agreement to give extensive technical assistance to Burmese policymakers. The news cheered investors concerned about Myanmar's ability to implement reforms effectively.
• A recent UN report showed that opium production in Myanmar had risen to its highest level in nearly a decade. Ethnic conflicts and widespread rural poverty have limited the success of the government's eradication efforts.
• The rate of inflation continued to accelerate in August, according to the latest available official data. Consumer prices rose by 2.2% year on year-the largest increase since September 2011-and by 1% month on month.

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