Myanmar Lags International Expectations

Global investors were quick to hype the unfolding reform story in Myanmar. Those energies may have been misspent. The World Bank has materially reduced its country growth forecast for 2017. GDP activity should now expand by 6.9% over the year ahead, rather than 8.4%. On the surface, that still sounds promising, but it is no longer the outsized win that it once was.

The key problem is failed momentum in foreign direct investment, with other Asian nations siphoning off lingering potential. Blame bureaucratic inertia. The government has stalled approval of new projects, especially in in the hydrocarbon sector. The attendant current-account imbalance is causing inflation to build through the currency-transmission mechanism. Imports are more-and-more expensive.

New investment-related policies are in the works. However, the souring international climate for trade — including the supply-chain implications for the aborted Trans-Pacific Partnership — means that Yangon faces storm clouds on the horizon. Those clouds are darker than would otherwise be the case because of Rohingya persecution in the northern Rakhine townships. US and European companies are sensitive to human-rights abuses toward this Muslim minority, while Arab firms are simply turning their back on Myanmar-based opportunities.

Learn more at the Nikkei Asian Review

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Image: Rural infrastructure demands in Myanmar are enormous. Credit: Imagex at Can Stock Photo Inc.

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