Country Report Myanmar November 2012

Country Report Myanmar November 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, the military and its allies will continue to dominate 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 6.7% 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 ruling Union Solidarity and Development Party has held a four-day conference to hammer out a strategy to increase its popular appeal.
• The government has reneged on a pledge to allow Islamic countries to open a liaison office to help Muslims displaced by sectarian clashes in western Myanmar, where deadly ethnic violence broke out again late October.
• In October a US military delegation visited Myanmar, raising the prospect that further political reform in Myanmar could lead to closer military ties.
• Japan has announced plans to help Myanmar to clear its outstanding debts to facilitate the resumption of concessional lending by international donors and multilateral organisations as soon as 2013.
• In early November the World Bank offered Myanmar a new aid package consisting of US$165m in low-interest loans and US$80m in grants.
• The latest data show that exports rose by 5.9% month on month to US$737m in July, while imports surged by 13.1% to US$677m. In year-on-year terms exports plummeted by 28.7% in the month, while imports were up by 22.6%.
• Consumer price inflation picked up to 0.7% year on year in July, returning to positive territory for the first time since December 2011. Monthly data suggest that inflationary pressures have intensified in the second half of 2012.

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