* The State Peace and
Development Council (SPDC, the ruling military junta) is planning to hold an
election in 2010. However, its objective appears to be legitimising its hold on
power.
* The junta seems to have softened its stance towards its main opponent, Aung
San Suu Kyi, but there is little likelihood that she will be permitted to play
a direct role in the planned election.
* Several Western governments, most notably that of the US, will push ahead
with a policy of engagement with the SPDC. However, sanctions will remain in
place in the near future.
* The junta will continue to run wide fiscal deficits in 2010-11. Despite
efforts to reduce tax evasion, the government’s revenue base remains small, and
it will continue to spend heavily on large projects that benefit the military
regime.
* 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 slowed sharply in 2009 as a consequence of falling
fuel and food prices, but it will pick up again in 2010-11.
Monthly review
* The SPDC appears to be
adhering to its plans to hold an election this year, but it has yet to set a
date or provide details of the conditions under which it will take place.
* In an apparent attempt to increase its relevance and make it more
representative ahead of the planned election, in January the National League
for Democracy appointed nine new members to its central executive committee.
* The government’s fiscal position appears weak, with growth in domestic tax
revenue slowing sharply in the early part of fiscal year 2009/10 (April-March).
* The government has announced another round of salary increases for low-paid
civil servants for the “sake of their living standards”.
* Data on the volume of output at state-owned enterprises suggests that some
sectors have performed sluggishly in recent months. For example, output of
natural gas was up by just 1.1% in the first six months of 2009/10.
* Consumer prices increased by 1% month on month in September. However, owing
to high prices in the year-earlier period, Myanmar recorded a second
consecutive month of year-on-year deflation in September.
Outlook for 2010-11:
Domestic politics
The State Peace and
Development Council (SPDC, the ruling military junta) will continue to push
ahead with its so-called road map to “disciplined democracy”, which has the
objective of legitimising its hold on power. The process is set to feature a
parliamentary election in 2010, which may be held in October. However, the
poll, the first of its kind in two decades, is not expected to be free and
fair, as the junta is likely to employ any means necessary, such as violently
suppressing any signs of dissent and detaining its leading opponents, to ensure
that it produces the required outcome.
Although in recent
months the junta appears to have softened its stance towards Aung San Suu Kyi,
the popular leader of the main opposition National League for Democracy (NLD),
permitting her to meet members of her party, the junta’s liaison officer and
foreign diplomats, the SPDC is not thought to have shifted its position on its
dealings with her party and other opposition groups. There have been numerous
false dawns in recent years, when the junta has seemingly displayed a
willingness to adopt a more conciliatory approach to dealings with the
opposition, only to revert to its hardline stance once it has managed to quell
international criticism.
In the coming few months
Aung San Suu Kyi’s plight will continue to be the focus of attention among
foreign diplomats, many of whom have demanded that the junta release her and
the 2,000 or so other political prisoners that it has detained before holding
an election. The NLD leader’s legal representatives are confident that they
will succeed in getting the charges against her, those of breaking the terms of
a previous detention order, quashed in the Supreme Court. They have argued that
the charges were based on provisions in the 1974 constitution, which they claim
is no longer in effect. However, this latest appeal will probably prove to be
another futile effort to bring about her freedom. (Aung San Suu Kyi has been in
some form of detention for 14 of the past 20 years. Her latest period under
house-arrest commenced in August 2009 and is due to expire in early 2011.)
Even if Aung San Suu Kyi
were to be freed through a successful appeal in the coming months, under the
current constitution she cannot contest the election as she was once married to
a foreigner. Moreover, the junta would be likely to seek other means to
restrict her freedom and prevent her from rallying her supporters ahead of the
election. In view of the fact that she remains a popular figure who draws
widespread support, her release would seriously undermine the junta’s efforts
to control every facet of the planned election, including the result.
There is little doubt
that the generals’ overarching objective is to cement a role for the military
in government, both directly through civilianised military leaders and
indirectly through pro-military political parties created to bolster support
for the unpopular regime. There are also provisions in the 2008 constitution
that guarantee that 25% of the seats in the national parliament (which has yet
to be established) are reserved for the military. Genuine opposition groups,
such as the NLD, remain in a difficult position, assuming that they will be
allowed to contest the election. Their dilemma is clear: if they boycott the
poll, they will achieve the aim of severely undermining the legitimacy of the
election’s outcome, but will run the risk of being unable to challenge the
junta in any formal setting. However, if opposition parties do take part in the
poll, the junta’s policy of intimidation of voters and manipulation of the
electoral system will ensure that its opponents fail to win a significant share
of power. Unlike in 1990, when the NLD won a landslide victory in a disputed
election, this time there is little chance of a surprise.
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—not least those stemming
from economic hardship—that could build and eventually prompt sporadic shows of
public defiance. The junta’s efforts to exert full control over the border
regions, which are populated and controlled by a large number of
ethnic-minority groups, could also result in fresh crises. Tension is
escalating in several areas (even where ethnic-minority groups have signed
ceasefire agreements with the regime) because of the junta’s new policy of
forcing these groups to transform their armies into militias under the control
of the SPDC before of the election. Most are reluctant to do so, as they see
their armed wings as a guarantee of at least a degree of autonomy. If the SPDC
pursues this policy too aggressively, a number of the ceasefire agreements are
likely to collapse.
Perhaps the biggest
threat to the junta’s long-term grip on power is internal strife. The SPDC’s
chairman, Senior General Than Shwe, still looks to be firmly in control, while
his close ally, the chief of staff of the armed forces, General Thura Shwe
Mann, appears to be the man most likely to succeed him at the junta’s helm. However,
a post-election shuffle of positions, which will include appointments to the
new posts of president and vice-president, could prove destabilising. There is
much uncertainty about the future role of General Than Shwe. He could decide to
eschew any formal position and instead seek to create a new, all-powerful role
above those defined in the constitution.
Outlook for 2010-11: International relations
In the face of the
SPDC’s intransigence, several Western governments have shifted their policy
towards Myanmar from one of isolation to one of tentative engagement. The US
government is pursuing such an approach, seemingly in the hope of increasing
its influence over the country. However, the US maintains that its dialogue
with the junta will supplement rather than replace sanctions. Myanmar’s fellow
members of the Association of South-East Asian Nations (ASEAN) continue to
avoid overt criticism of the junta, instead offering support for efforts
towards national reconciliation. China will continue to use its power of veto
in the UN Security Council to prevent the body from censuring the SPDC, but
relations between the junta and the Chinese government will be tested if the
SPDC pursues its offensive against ethnic-minority groups in the regions of the
country that border China.
Outlook for 2010-11: Policy trends
The junta’s management
of the economy will remain poor. Unlike most other governments in Asia, the
junta has not implemented any fiscal stimulus measures to help to offset
negative consequences of the global economic downturn. This could be because
the junta does not accept that Myanmar’s economy has suffered, but it may also
be that its priorities lie elsewhere, such as strengthening its military
capability or completing the construction of its new administrative capital,
Naypyidaw. On the fiscal policy side, the government is likely to remain
focused on spending heavily on the military while pursuing few policies to
support households and businesses. Meanwhile, the readiness of the Central Bank
of Myanmar to print money to finance the government’s deficits means that
monetary policy is in effect unavailable as a tool with which to steer the
economy.
Outlook for 2010-11: Fiscal policy
The junta will continue
to run wide fiscal deficits in 2010-11. Despite efforts to reduce tax evasion,
the government’s revenue base remains small, and it will continue to spend
heavily on large projects (such as the development of Naypyidaw) that provide
benefits to the military and its leaders, borrowing funds from the central bank
and other sources to support such schemes. Expenditure may also rise ahead of
the 2010 election if the junta decides to go on a populist spending spree (it
has recently increased salaries for low-paid civil servants), but it is more
likely that the junta will favour a policy of spending to bolster its capacity
to suppress opposition and ensure that the election produces the required
result. Although the junta set aside additional funds for the reconstruction
effort following the devastation caused by Cyclone Nargis in May 2008, the cost
of reconstruction and other programmes is being borne mainly by international
donors.
Outlook for 2010-11: Monetary policy
The central bank does
not tighten monetary policy significantly, even in periods of high inflation,
meaning that interest rates will remain low in real terms. The bank made a
surprise change to interest rates—the first adjustment for five years—in April
2006, raising its leading indicator rate by 2 percentage points, to 12%. There
have been no further changes since then. The bank remains reluctant to tighten
monetary policy aggressively, as it is not operationally independent from the
government and is therefore keen to avoid increasing the public sector’s
debt-servicing burden.
Outlook for 2010-11: International assumptions
International assumptions summary
(% unless otherwise indicated)
2008 2009 2010 2011
Real GDP growth
World 2.8 -1.0 3.6 3.5
OECD 0.5 -3.4 1.9 1.5
China 9.0 8.3 9.5 8.3
EU27 0.7 -4.1 0.9 1.1
Exchange rates
¥:US$ 103.4 93.7 88.0 87.0
US$:€ 1.470 1.393 1.423 1.398
SDR:US$ 0.629 0.646 0.635 0.638
Financial indicators
€ 3-month interbank rate 4.65 1.23 1.03 2.50
US$ 3-month Libor 2.91 0.69 0.98 1.93
Commodity prices
Oil (Brent; US$/b) 97.7 62.0 78.0 73.0
Gold (US$/troy oz) 871.8 973.0 1,186.3 1,231.3
Food, feedstuffs & beverages (% change in US$ terms) 29.5 -21.6 2.1 0.8
Industrial raw materials (% change in US$ terms) -5.1 -25.6 31.2 0.6
Note. Regional GDP growth rates weighted using purchasing power parity exchange
rates.
The global economic
picture has continued to improve, with many economic indicators now performing
better than had been expected. Although there is a risk of a renewed slowdown
in growth in 2011, at purchasing power parity exchange rates the Economist
Intelligence Unit expects the world economy to expand by 3.6% in 2010 and by
3.5% in 2011, following an estimated contraction of 1.0% in 2009. We expect
international oil prices (dated Brent Blend) to rise in 2010 and then to fall
in 2011.
Outlook for 2010-11: Economic growth
The pace of growth in
Myanmar’s economy will accelerate in 2010-11, having slowed in 2009 owing to a
combination of domestic factors and the impact of the global recession.
However, the domestic economy (excluding the oil and gas sector) will remain
sluggish. Agriculture, which was hit hard by Cyclone Nargis in 2008, will
continue to struggle to grow rapidly because of a lack of investment and poor
access to important inputs and equipment. However, owing to favourable weather
conditions national rice output has been stronger than expected in the past
year. The post-cyclone aid-funded rebuilding effort has boosted construction,
and growth in this industry will remain strong. However, manufacturing will
continue to be troubled, reflecting the lack of access to inputs and capital
for investment, while weak external demand has compounded the difficulties
facing export-oriented manufacturing firms. Production of natural gas has
plateaued and will not record further strong growth until new fields come on stream;
this will not happen until 2013 at the earliest. Mining operations will
continue to be hampered by lacklustre global demand and the impact of sanctions
on international trade.
The outlook for growth
in private consumption and investment by local enterprises is also fairly
bleak. Consumer spending is constrained by low average incomes and a lack of
confidence, owing to price instability and the weak free-market exchange rate.
Consumption in 2009 was depressed by a drop in farm incomes (amid falling commodity
prices) and by a decline in official and unofficial remittances from workers
overseas as a result of job losses suffered by Burmese nationals employed
abroad. Such trends will continue for much of 2010. Foreign interest will be
maintained in energy, mining and petroleum projects, particularly from Chinese
firms. However, other sectors will struggle to attract substantial foreign
direct investment in the outlook period.
Outlook for 2010-11: Inflation
Consumer price inflation
slowed sharply in 2009, falling to an estimated average of 6.5%, in line with
declining fuel and food prices. But the rate of inflation will pick up again in
2010-11, to an annual average of almost 12%. (The Central Statistical
Organisation recently rebased its consumer price index, resulting in a sharp
downward revision to the year-on-year measure of inflation. However, our
inflation series does not yet incorporate this change.) Although supply-side
price pressures will not be as strong as in 2008, the central bank is set to
continue to fund the government’s budget deficit by printing money, and the
consequent growth in domestic credit will push up the general price level.
Outlook for 2010-11: Exchange rates
The free-market value of
the kyat has weakened in recent weeks, dropping back to Kt1,050:US$1, having
appreciated to around Kt960:US$1 in the previous couple of months. We expect
the kyat to return to a depreciating trend in the next two years. Although the
merchandise trade surplus will remain fairly high, the potential for political
instability will undermine confidence in the kyat, while the relatively low
level of inward remittances from overseas Burmese will offset further
cyclone-related aid inflows.
Outlook for 2010-11: External sector
Export revenue will edge
upwards in 2010-11. Revenue from exports of natural gas, the main export
earner, will remain fairly stable until new fields come on stream (in 2013 at
the earliest), but other important exports, such as pulses and timber, will rise
in line with a recovery in regional demand. The import bill will also grow in
2010-11, partly owing to an increase in prices for imported petroleum products.
Meanwhile, the post-cyclone reconstruction programme and the development of
petroleum and hydropower projects mean that there will continue to be demand
for imports of building materials and machinery. The merchandise trade surplus
will be large enough to offset the combined deficit on the services and income
accounts in 2010-11. As a result, the current account will remain in surplus.
Outlook for 2010-11: Forecast summary
Forecast summary
(% unless otherwise indicated)
2008a 2009a 2010b 2011b
Real GDP growthc 1.1 1.8 3.1 4.3
Gross fixed investment growthc 10.0 5.0 7.5 12.0
Gross agricultural production growthc 2.2 1.2 3.0 4.0
Consumer price inflation (av) 26.8d 6.5 10.4 12.8
Consumer price inflation (year-end) 20.4d 6.6 9.9 17.2
Short-term interbank rate 17.0d 17.0 17.0 17.0
Government budget balance (% of GDP)c -3.5 -4.5 -4.8 -4.8
Exports of goods fob (US$ bn) 6.7 6.8 7.8 8.1
Imports of goods fob (US$ bn) 3.4 3.9 4.6 5.1
Current-account balance (US$ bn) 1.3 0.8 0.6 0.3
Current-account balance (% of GDP)e 5.7 2.9 2.1 1.1
External debt (year-end; US$ bn) 7.9 7.6 7.6 7.6
Official exchange rate Kt:US$ (av)f 5.4d 5.5 5.4 5.4
Exchange rate Kt:US$ (av)g 1,185.0 1,055.0 1,140.0 1,265.0
Exchange rate Kt:¥100 (av)g 1,146.4 1,125.9 1,295.5 1,454.0
Exchange rate Kt:Bt (av)g 35.6 30.8 34.5 38.7
a Economist Intelligence Unit estimates. b Economist Intelligence Unit forecasts.
c Fiscal years (beginning April 1st of year shown). d Actual. e Fiscal years
(beginning April 1st of year shown); at free-market exchange rate (which
understates the size of GDP). f Official rate (there is a wide differential
between the official and free-market rates). g Free-market rate.
Download the numbers in
Excel
The political scene: The junta reaffirms its plans to hold an election this
year
The State Peace and
Development Council (SPDC, the military junta) appears to be adhering to its
plans to hold an election in 2010, but it has yet to set a date or pass
election-related legislation. In his national address on January 4th, the
country’s Independence Day, the SPDC chairman, Senior General Than Shwe,
confirmed that the junta was continuing to implement its seven-stage roadmap
for the Myanmar’s transition to a democracy. He stated that plans were under
way to hold an election in 2010, and added that people had to make the “correct
choices” at the ballot box. It remains uncertain which opposition parties will
take part in the election (if they are permitted to do so), but there is
speculation that a pro-junta mass-membership social welfare organisation, the
Union Solidarity Development Association (USDA), will form a number of parties
ahead of the election. The USDA, which was established by the junta in the
early 1990s, is one of a number of core organisations that has the task of
giving people “political leadership”.
Although the junta has
yet to announce a date for the election, in early January a Japanese daily
newspaper, The Asahi Shimbun, cited a source in the junta as saying that the
election would be held on October 10th. Supporting this, after meeting his
Myanmar counterpart, Nyan Win, in Vietnam in mid-January, Thailand’s foreign
minister, Kasit Piromya, said that he thought the election would probably be
held in the second half of the year. He stated that Nyan Win had revealed that
the junta had already completed 60-70% of new legislation governing the
election and political parties. Kasit’s meeting with Nyan Win took place at a
gathering of foreign ministers from the Association of South-East Asian Nations
(ASEAN).
Following the meeting of
ASEAN foreign ministers, the group’s secretary-general, Surin Pitsuwan, said
that Nyan Win had assured the group that the SPDC was continuing to make
progress with its election preparations and that the election would be “free,
fair and credible”, although no date had been set for the election. However,
the continued detention of 2,000 or so political prisoners undermines its
claims that the poll will be free and fair. A number of foreign governments
have been calling on the junta to release the prisoners ahead of the election,
making special mention of Aung San Suu Kyi, the leader of the main opposition
National League for Democracy (NLD). She has been detained (mostly under
house-arrest) since May 2003, and for 14 of the past 20 years. In August 2009
she was put under house-arrest for a further 18 months, after being found
guilty of breaking the terms of her previous detention order. In January
Japan’s foreign minister, Katsuya Okada, urged the junta to release Aung San
Suu Kyi and to hold a fair election. This followed a personal letter from the
UK’s prime minister, Gordon Brown, to the NLD leader, in which he said that if
the elections proceeded with opposition leaders excluded the junta would be
condemning the country to “years of diplomatic isolation and economic
stagnation”.
The junta has responded
this international pressure by holding talks with the NLD leader. Aung San Suu
Kyi recently had another meeting with the junta’s “liaison officer”, Aung Kyi,
a retired major-general who also holds the post of labour minister. The talks,
which were held on January 13th, followed a meeting in mid-December 2009 and
two meetings in October. Although no details of the discussions between the NLD
leader and the junta’s liaison officer have been revealed, it is possible that
Aung San Suu Kyi has pushed for talks with General Than Shwe.
The political scene: The NLD expands its leadership committee
In what appears to be an
attempt to increase the party’s relevance and make it more representative ahead
of the planned election, in January the NLD appointed nine new members to its
central executive committee. Prior to this there had been speculation that the
NLD would replace several of the elderly members of the original 11-member
committee, nine of whom are in their eighties and nineties, and some are in
poor health. However, instead of this (and seemingly to avoid setting the
precedent of forcing ageing members to retire from leadership positions), the
party enlarged the committee, stating that this was aimed at increasing the
party’s work and “efficiency”. Shortly after expanding the committee, the party
also revealed that it planned to re-establish a second tier of leadership, a
central committee that would have 80 to 120 members who represent all of the
country’s states and divisions.
Party officials have
denied that the leadership reorganisation was part of the NLD’s preparations
for the forthcoming election. However, moves to bring in younger members to
steer to the party in the build-up to the planned election appear to be
regarded by many NLD members as necessary to bolster its position as the
mainstream opposition party. The NLD has yet to make clear its plans for the
election, and it remains uncertain whether the party will contest the poll if
it is allowed. In its official statement to mark Independence Day, the NLD
focused on the need for the country to undergo a process of national
reconciliation. It outlined its general demands, which included the release of
Aung San Suu Kyi and all other political prisoners, greater political freedom,
and changes to allow political parties to open offices and operate without restrictions.
The NLD chairman, Aung Shwe, has also urged the party’s members to stand by its
Shwegonedine Declaration, which includes the demand that the junta amend the
2008 constitution before it would agree to participate in the election.
Meanwhile, General Than Shwe has insisted that all political parties will have
to operate under the current charter.
Economic policy: Growth in tax revenue slows
The government’s fiscal
position appears weak, with growth in domestic tax revenue slowing sharply in
the early part of fiscal year 2009/10 (April-March). According to data from the
Central Statistical Organisation (CSO), central government tax revenue
(excluding customs duties) rose by 2.5% year on year in September, pulling
average growth in the first six months of 2009/10 down to 4.5%. (In the whole
of 2008/09 tax revenue rose by nearly 14%.) Although a sharp slowdown in
inflation is part of the reason for the deceleration in tax revenue growth in
nominal terms, the latest trend suggests that the domestic economy remains
lacklustre, with revenue from income and profit taxes contracting by 2.1% in
April-September 2009, to Kt233.2bn (US$43.2bn at the official exchange rate or
US$205m at the free-market rate). However, revenue from commodity, services and
commercial taxes rose by 10.5% to Kt174.8bn, while revenue from lottery and
stamp duties also continued on an upward trend. Meanwhile, customs duties
plunged by 59% year on year to Kt16.6bn in April-September, with duties from
border trade (small-scale trade with bordering countries) plummeting by 84% to
Kt4.1bn and revenue from “normal” trade (which goes via pipelines, sea or air)
falling by 15.8%.
Although data on the
overall fiscal position are not available, the government has continued to sell
bonds, which suggests that its overall position is in deficit. At the end of
September the total value of outstanding three- and five-year bonds had reached
Kt896bn, up from Kt297bn at the end of 2008/09. The government also commenced
issuance of two-year bonds on January 1st 2010, with a yield of 10.5%. Initial
demand among individuals, businesses and banks appeared to be strong.
Economic policy: Civil servants’ salaries are increased
The government has
announced another round of salary increases for low-paid civil servants for the
“sake of their living standards”. The increase, which came into effect in
January, is fixed at Kt20,000 (around US$3,700 at the official exchange rate or
US$17.5 at the free-market rate) a month for civil servants earning between
Kt15,000 (the bottom end of the pay scale) and Bt200,000. The wage adjustments
will benefit around 100,000 employees. Despite a sharp increase in civil
servants’ pay in early 2006, a further adjustment in salaries was overdue, as
recent high rates of inflation (which averaged 27% a year between 2006 and
2008) have severely eroded salaries in real terms, with wages for civil
servants failing to keep pace with the cost of living. Low real remuneration
for civil servants is thought to be a major contributory factor to the endemic
nature of low-level corruption in the country, while many civil servants take
on second jobs to supplement their main income.
Although the junta has
stated that the recent pay rise was intended to help civil servants to cope
with the higher cost of living, it may also have been driven by political
factors, given that the junta is planning to hold an election in 2010. However,
the recent pay rise was not as great as the one that came into effect in April
2006. Then, the Ministry of Finance and Revenue increased the salaries of civil
servants and military officers by between 500% and 1,200%. Wages for
high-ranking officials subsequently rose from Kt10,000-Kt16,000 a month to a
between Kt120,000-Kt200,000 a month, while at the lower end of the scale, salaries
rose from Kt3,000-Kt3,500 to around Kt15,000-Kt20,000 a month.
Economic performance: Output growth appears fairly weak
Owing to the lack of
comprehensive data on output and expenditure, it remains difficult to assess
current trends in domestic economic activity. However, the available data on
the volume of output at state-owned enterprises suggests that some sectors have
been sluggish recently. According to the CSO, output of natural gas (Myanmar’s
main source of export revenue) fell by 5.7% year on year in September 2009, and
was up by just 1.1% in the first six months of 2009/10. Meanwhile, output of
crude oil dropped by 6.3% year on year in September, and was up by just 1.2% in
April-September. In an indication that the construction sector may be slowing
after seemingly growing strongly in recent years, output of cement dropped to
its lowest level in 12 months in September, pulling down average growth in the
first six months of 2009/10 to 4.2%.
Fertiliser output growth
also slowed in September, dropping to 2.6% year on year. However, as growth in
the first six months of the fiscal year stood at 55%, the agricultural sector
appears to have remained fairly buoyant. The small-scale manufacturing sector
seems to be picking up. Output of cotton fabrics increased by 16.5% year on
year in September and by 10.3% year on year in April-September. Output of
cotton yarn was also up in the first six months of 2009/10, by 3%. However, the
mining sector remains weak, and is still suffering in the face of weak global demand
and US sanctions (which were tightened in mid-2008 to make it harder for
traders to ship gems from Myanmar via third countries). In April-September
production of gems (excluding jade) plummeted by 65% year on year, while output
of jade was down by 17.8%.
Economic performance: Prices rise on a monthly basis, but fall in year-on-year
terms
Consumer prices have
continued to rise on a month-on-month basis in recent months. In September
prices rose by 1% compared with August and by 6.2% compared with March, when
prices began to rise again following five consecutive months of month-on-month
declines. However, owing to high prices in the year-earlier period, Myanmar
recorded a second consecutive month of year-on-year deflation in September.
According to data from the CSO, prices were down by 0.1% year on year in
September. This pulled down the average rise in prices in the first nine months
of 2009 to just 1.6%. The CSO rebased its consumer price index (CPI) in July,
resulting in a sharp downward revision to the year-on-year measure of
inflation. (According to the old series, inflation averaged 9.1% year on year
in the first half of the year, but based on the new series the average was just
2.5%.)
The drop in prices on a
year-on-year basis primarily reflects the fact that prices for food, which have
the heaviest weighting in the CPI, remain below their year-earlier highs. In
September 2009 food prices were down by 2.5% year on year, bringing down
average food price inflation in the first nine months of the year to just 0.2%.
In September prices for clothing and footwear rose by 4.5% year on year and
prices for fuel and light by 1.8%. Prices in the house rent and repairs
category of the CPI increased by 24.7% in September, and were up by an average
of 25.5% in the first nine months of 2009.
Economic performance: Exports drop in September, but import bill continues to
rise
Myanmar’s export revenue
continues to fluctuate sharply on a monthly basis, primarily owing to the
uneven nature of receipts from the country’s gas exports. In September total
export revenue fell by 18% year on year to Kt2.2bn, according to trade data
from the CSO. Nevertheless, owing to the solid performance in previous months
(exports reached Kt4.8bn in August), export revenue was up by 15.2% on a
year-on-year basis in the first nine months of 2009. The downturn in total
export revenue in September was mainly due to a fall in receipts from
natural-gas exports, which, at Kt702m (US$130m at the official exchange rate or
US$615,000 at the free-market rate), were around one-half of the monthly
average of Kt1.4bn that was recorded in the first eight months of the year. In
January-September gas exports amounted to Kt10.1bn, representing a year-on-year
increase of 20.7%. This growth was driven solely by price rises; in volume
terms gas exports were down by 9.5% in the first nine months of the year.
The import bill remains
high—in September it was up by 77% year on year to Kt2.1bn, and in the first
nine months of the year it rose by 29% to Kt20.3bn. Myanmar continues to rely
heavily on imported petroleum products, the cost of which amounted to Kt3.8bn
in January-September, a year-on-year increase of 30%. It also relies on imports
of capital goods—in the first nine months of the year imports of non-electrical
machinery and transport equipment soared by 73% to Kt5.6bn. Owing to the
continued growth in imports and the drop in export revenue, Myanmar recorded
only a small merchandise trade surplus in September, of Kt183m. In
January-September the trade account recorded a surplus of Kt8.3bn, compared
with a surplus of Kt9.1bn in the year-earlier period.
Economic performance: The tourism industry appears to be picking up
Myanmar’s tourism
industry remains underdeveloped compared with those of most other countries in
South-east Asia, in part owing to the regular campaigns by human rights and
pro-democracy groups in a number of countries urging tourists to stay away from
the country. Tourist interest in the country has also been limited by concerns
over political stability following mass protests against the military regime in
August-September 2007 and the impact of Cyclone Nargis in May 2008, which
killed around 130,000 people and devastated the southern delta region. However,
recent local media reports suggest that hotel operators, buoyed by recent
growth in arrivals and higher occupancy rates, are optimistic that the
industry’s fortunes will continue to improve. The latest CSO data show that
total tourism arrivals rose by just 2.2% year on year in January-September 2009,
but that arrivals by air increased by 21.7% to nearly 86,000. Meanwhile, data
from the Ministry of Hotels and Tourism show that tourist arrivals rose by 10%
in January-October. Although recent problems in the country have curtailed
foreign investment, two foreign invested projects in the tourism sector, each
worth around US$15m and backed by Thai investors, gained formal approval in the
first nine months of 2009.
Data and charts: Annual
data and forecast
2005a 2006a 2007b 2008b 2009b 2010c 2011c
GDPd
Nominal GDP (US$ m) 11,221 11,888b 16,312 22,664 27,542 28,874 30,405
Nominal GDP (Kt bn) 12,287 15,217b 21,043 26,857 29,057 32,917 38,462
Real GDP growth (%) 13.6 3.4b 3.4 1.1 1.8 3.1 4.3
Expenditure on GDP (% real change)d
Private consumption 10.2b 3.0b 2.0 -1.8 0.2 1.5 2.0
Government consumption 26.2b 15.0b 15.0 15.0 12.0 8.0 8.0
Gross fixed investment 29.7 5.0b 6.0 10.0 5.0 7.5 12.0
Exports of goods & services 3.6 12.0b 10.0 2.5 5.0 2.5 3.1
Imports of goods & services 2.3 30.0b 9.0 4.2 12.0 9.2 8.7
Origin of GDP (% real change)d
Agriculture 12.1 3.0b 1.4 2.2 1.2 3.0 4.0
Industry 19.9 8.2b 9.0 7.8 3.4 1.0 4.6
Services 13.1 1.7b 3.5 -3.7 2.0 4.3 4.7
Population and income
Population (m) 48.4 48.7 49.1a 49.6a 49.9 50.3 50.8
GDP per head (US$ at PPP) 2,365b 2,505b 2,641 2,704 2,762 2,851 2,984
Fiscal indicators (% of GDP)d
Central government budget revenue 4.6b 4.4b 4.2 4.4 4.3 4.2 4.3
Central government budget expenditure 6.7b 7.1b 7.2 8.0 8.8 9.0 9.1
Central government budget balance -2.2b -2.6b -3.0 -3.5 -4.5 -4.8 -4.8
Prices and financial indicators
Exchange rate Kt:US$ (av; official rate) 5.76 5.78 5.56a 5.36a 5.50 5.40 5.43
Exchange rate Kt:US$ (av; free-market rate) 1,095b 1,280b 1,290 1,185 1,055
1,140 1,265
Consumer prices (end-period, %) 14.3 28.4 28.6a 20.4a 6.6 9.9 17.2
Stock of money M1 (% change; end-period) 31.3 26.5 30.2a 6.8a 16.0 12.2 16.2
Stock of money M2 (% change; end-period) 27.3 27.2 30.0a 14.8a 17.9 13.1 15.8
Lending interest rate (av; %) 15.0 16.1 17.0a 17.0a 17.0 17.0 17.0
Current account (US$ m)
Trade balance 2,028 2,211 3,206 3,289 2,908 3,263 3,019
Goods: exports fob 3,788 4,555 6,170 6,677 6,808 7,836 8,148
Goods: imports fob -1,759 -2,343 -2,964 -3,388 -3,900 -4,574 -5,129
Services balance -243 -283 -307 -347 -418 -440 -471
Income balance -1,384 -1,291 -1,750 -2,033 -2,019 -2,405 -2,411
Current transfers balance 174 122 137 372 316 190 183
Current-account balance 576 760 1,285 1,281 788 607 320
External debt (US$ m)
Debt stock 6,645 6,828 7,373a 7,946 7,641 7,649 7,631
Debt service paid 107 86 355a 185 205 242 219
Principal repayments 81 61 282a 142 162 195 166
Interest 25 25 73a 43 43 47 53
International reserves (US$ m)
Total international reserves 782 1,248 2,312 3,412 3,561 3,762 3,912
a Actual. b Economist Intelligence Unit estimates. c Economist Intelligence
Unit forecasts. d Fiscal years (beginning April 1st of year shown).
Source: IMF, International Financial Statistics.
Data and charts:
Quarterly data
2007 2008 2009
4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr
Prices
Consumer prices (2000=100) 176.8 188.0 202.8 213.7 217.4 211.9 213.8 n/a
Consumer prices (% change, year on year) 30.3 29.0 29.1 26.9 22.9 12.7 5.4 n/a
Financial indicators
Exchange rate Kt:US$ (av; official rate) 5.41 5.34 5.23 5.35 5.65 5.69 5.60
5.50
Exchange rate Kt:US$ (av; free-market rate)a 1,310 1,183 1,155 1,215 1,186
1,068 1,050 1,103
Central bank rate (end-period; %) 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0
Deposit rate (av; %) 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0
Lending rate (av; %) 17.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0
M1 (end-period; Kt bn) 3,217 3,136 3,279 3,322 3,437 3,665 3,765 n/a
M1 (% change, year on year) 30.2 17.0 19.5 12.4 6.8 16.9 14.8 n/a
M2 (end-period; Kt bn) 4,384 4,397 4,629 4,809 5,033 5,426 5,773 n/a
M2 (% change, year on year) 30.0 20.9 21.2 17.9 14.8 23.4 24.7 n/a
Sectoral trends, production
Natural gas (bn cu ft) 118 116 104 118 101 79 111 113
Tin in concentrates (tonnes) 222 202 158 159 249 163 205 236
Crude oil (’000 barrels) 1,883 1,880 1,701 1,911 1,750 1,528 1,869 1,787
Jade (tonnes) 2,854 6,957 10,876 4,095 8,967 8,983 10,267 2,047
Gems (’000 carats) 4,956 5,358 6,491 6,559 2,090 3,589 1,448 3,095
Foreign trade (Kt m)
Exports fob 6,321 8,995 7,234 8,634 12,802 8,359 9,122 11,150
Imports cif 5,347 4,889 5,899 4,940 7,516 6,518 5,274 8,531
Trade balance 974 4,107 1,335 3,693 5,285 1,841 3,848 2,619
a Economist Intelligence Unit estimates.
Sources: Central Statistical Organisation, Selected Monthly Economic
Indicators; IMF, International Financial Statistics.
Data and charts: Monthly
data
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Exchange rate Kt:US$ (av; official rate)
2007 5.69 5.68 5.64 5.60 5.61 5.63 5.56 5.56 5.51 5.46 5.36 5.40
2008 5.37 5.37 5.28 5.20 5.24 5.26 5.22 5.37 5.47 5.62 5.74 5.59
2009 5.60 5.73 5.74 5.69 5.59 5.51 5.54 5.51 5.45 n/a n/a n/a
Exchange rate Kt:US$ (av; free-market)
2007 1,300 1,300 1,270 1,250 1,250 1,250 1,280 1,300 1,350 1,300 1,310 1,320
2008 1,250 1,200 1,100 1,115 1,150 1,200 1,185 1,190 1,270 1,200 1,235 1,125
2009 1,190 1,000 1,015 1,020 1,040 1,090 1,110 1,100 1,100 n/a n/a n/a
Money supply M1 (% change, year on year)
2007 29.6 27.6 25.5 25.0 20.7 24.9 22.8 25.8 27.8 30.8 32.0 30.2
2008 27.7 25.4 17.0 16.1 20.1 19.5 20.5 19.4 12.4 10.7 8.4 6.8
2009 7.4 9.9 16.9 15.8 14.5 14.8 14.9 n/a n/a n/a n/a n/a
Money supply M2 (% change, year on year)
2007 28.8 27.7 27.1 26.9 25.4 28.3 26.5 28.1 27.7 29.4 30.8 30.0
2008 28.5 26.6 20.9 20.9 21.8 21.2 22.1 20.8 17.9 16.5 15.1 14.8
2009 15.5 17.6 23.4 24.0 22.4 24.7 23.8 n/a n/a n/a n/a n/a
Deposit rate (av; %)
2007 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0
2008 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0
2009 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 n/a n/a
Lending rate (av; %)
2007 17.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0
2008 17.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0
2009 17.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0 n/a n/a
Consumer prices (av; % change, year on year)
2007 34.6 37.5 38.7 40.9 38.7 37.1 36.3 34.5 34.2 32.7 29.8 28.6
2008 29.1 29.0 28.8 28.3 30.5 28.4 27.7 26.8 26.2 25.1 23.5 20.4
2009 16.3 12.7 9.2 8.4 4.7 3.3 n/a n/a n/a n/a n/a n/a
Foreign-exchange reserves excl gold (US$ m)
2007 1,297 1,421 1,695 1,369 1,652 1,783 n/a n/a n/a n/a n/a n/a
2008 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
2009 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Sources: IMF, International Financial Statistics; Haver Analytics.
Data and charts: Annual
trends charts
Please see graphic below
Data and charts: Monthly
trends charts
Please see graphic below
Data and charts:
Comparative economic indicators
Please see graphic below
Basic data
Land area
676,563 sq km
Population
48.8m (IMF mid-2007
estimate)
Main towns
Population in ’000 (1983
census)
Yangon: 2,513 Pegu: 320
Mandalay: 533 Moulmein:
220
Note. In 2006 the junta
moved the country’s administrative capital from Yangon to the town of
Naypyidaw. In the text, places other than Myanmar and Yangon are referred to by
their pre-1989 names. Pre-1989 place names appear in brackets on the map at the
beginning of this report
Climate
Subtropical
Weather in Yangon
(altitude 5 metres)
Hottest month, April,
24-36°C; coldest month, January, 18-23°C; driest month, January, 3 mm average
rainfall; wettest month, July, 582 mm average rainfall
Language
Burmese; numerous other
minority languages are also in use, such as Karen and Shan
Measures
Derived from the UK
system. Some other units are in use. For example, 0.9842 long or imperial tons
= 1 metric tonne = 1.10231 short tons. Local measures include: 1 lakh = 100,000
units; 1 crore = 10,000,000 units; 1 viss or peiktha = 100 ticles = 1.6 kg; 1
basket (paddy) = 20.9 kg; 1 basket (rice) = 34 kg
Currency
1 kyat (Kt) = 100 pyas.
Average official exchange rate in 2008: Kt5.36:US$1. Average free-market
exchange rate in 2008: K1,185:US$1 (based on private estimates)
Time
6.5 hours ahead of GMT
Fiscal year
April 1st-March 31st
Public holidays
January 4th
(Independence Day); February 12th (Union Day); March 2nd (Peasants’ Day); March
27th (Armed Forces’ Day); April 13th-17th (Thingyan, New Year); May 1st
(Workers’ Day); July 19th (Martyrs’ Day); November 25th (National Day);
December 25th (Christmas Day); plus other holidays, the timing of which depends
on lunar sightings
Political structure
Official name
Union of Myanmar
Form of state
Military dictatorship
The executive
Following a military
coup in 1988, the State Law and Order Restoration Council assumed executive
power. In 1997 it was renamed the State Peace and Development Council (SPDC)
Head of state
Chairman of the SPDC,
Senior General Than Shwe
National legislature
The Pyithu Hluttaw
(People’s Assembly) was abolished after the military coup in 1988; an election
was held for a new People’s Assembly in 1990, resulting in an overwhelming victory
for the opposition National League for Democracy (NLD), but the junta refused
to recognise the result. In 2003 the junta announced a seven-point “road map”
that would lead to the convening of parliament following fresh elections
National elections
In February 2008 the
junta announced plans to hold a multiparty national election in 2010 as a stage
on its reform road map. It remains unclear under what conditions the election
will take place
National government
The SPDC controls all
organs of state power
Main political
organisations
Since the military coup,
most political parties have been declared illegal. The few that are still
officially registered face restrictions on their activities. The NLD is the
most significant remaining opposition political party. The junta has developed
the Union Solidarity Development Association (which was set up in 1993 as a
welfare organisation) into a quasi-political party and support bloc for the
military regime. A number of ethnic-based political groups and their armed wings
also exist
Main political parties
NLD; National Unity
Party (NUP); Shan Nationalities League for Democracy (SNLD) and other
ethnic-based parties
Main members of the
State Peace and Development Council
Chairman: Senior General
Than Shwe
Vice-chairman: Deputy
Senior General Maung Aye
Secretary-1: Lieutenant
General Tin Aung Myint Oo
Prime minister: General
Thein Sein
Key ministers
Agriculture: Major General Htay Oo
Commerce: Brigadier General Tin Naing Thain
Defence: Senior General Than Shwe
Energy: Brigadier General Lun Thi
Finance & revenue: Major General Hla Tun
Foreign affairs: Major General Nyan Win
Home affairs: Major General Maung Oo
Industry-1: Aung Thaung
Industry-2: Vice-Admiral Soe Thein
Labour: Aung Kyi
Mining: Brigadier General Ohn Myint
Telecommunications, posts & telegraphs: Brigadier General Thein Zaw
Central Bank governor
Than Nyein
