Country Report Myanmar November 2009

Outlook for 2010-11

• The State Peace and Development Council (SPDC, the ruling military junta) will continue to push ahead with its so-called road map to democracy, with the objective of legitimising its hold on power.
• Although the most likely scenario in 2010-11 is that the junta will remain in control, there could be a degree of volatility. There are underlying pressures that could build up and eventually prompt sporadic shows of public defiance.
• Some Western governments, most notably the US, appear keen on shifting their stance towards the junta from one of isolation to one of engagement. Sanctions, however, will remain in place for the time being.
• The government remains focused on spending heavily on the military, with few (if any) initiatives in the pipeline to support households and businesses or to stimulate the economy.
• After weakening in 2009 owing to a combination of domestic factors and the impact of the global recession, Myanmar's economy will be sluggish in 2010-11.
• Consumer price inflation has slowed sharply this year in line with falling fuel and food prices, but it will pick up again in 2010-11.

Monthly review

• Although Aung San Suu Kyi, the leader of the main opposition National League for Democracy, remains under house arrest, there appears to have been some thawing in relations with the SPDC.
• The US government has announced a new policy of engagement with the SPDC. However, US sanctions aimed at pressuring the repressive junta into undergoing genuine political reform will remain in place.
• The government's fiscal position is likely to have deteriorated further in the first quarter of 2009/10 fiscal year (April-March). During this period central government tax revenue rose by just 2.4% year on year.
• The government's recent decision to issue banknotes with a value of Kt5,000 (less than US$5 at the free-market exchange rate) has created some concern in the country. The previous highest-value note was Kt1,000.
• Although there are worries over the general health of the domestic economy, oil and gas production was buoyant in the first few months of 2009/10.
• Consumer prices increased on a month-on-month basis in June for the third successive month after four months of successive decline, but year-on-year inflation remains on a slowing trend.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60
NAICS Code: 52