There is an Asian country that doesn’t have an active stock market or even a credit rating. Yet its economy may grow by 10 percent this year. Meet Myanmar, an unlikely growth star.
The frenetic growth in the country formerly known as Burma is in stark contrast to many large emerging market countries that are struggling to muster any economic growth, having been hobbled by the largest capital outflows in nearly three decades,
In an interview with CNBC, Aung Tun Thet, economic adviser to Myanmar’s President, said gross domestic product may grow by 10 percent in the financial year through March as Myanmar revamps its infrastructure and tourist inflows pick up. The Asian Development Bank estimates that the economy grew by 7.7% in calendar 2014.
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Foreign direct investments are likely to climb 25 percent from a year earlier to $10 billion, Thet said, giving a much-needed boost to the economy that remains one of the poorest countries in the region.
“We see investors coming in, not just in traditional sectors such as infrastructure but also hospitality and knowledge-based industries. We see many possibilities in the tourism sector,” he said.
The numbers do need to be taken into context. The absolute size of Myanmar makes comparisons to a small base favorable and the economy has only recently started to open up, having been shuttered to the outside world under military rule.
Infrastructure remains creaky and a quarter of the population lives below the poverty line, the Asian Development Bank estimates.
The economy is also heavily dependent on the oil and gas sector. Drooping global prices are likely to pinch Myanmar, although Thet said the recent opening of a special economic zone should attract more companies in manufacturing.
The underdeveloped telecommunications sector is also growing rapidly, while construction of highways linking Myanmar to larger economies in the region should enhance connectivity.
Myanmar, which goes to polls in November, has also taken steps to develop its financial sector.
The country has held talks with lenders to begin the process of getting a credit rating that will enable foreign investors to assess the country’s credit-worthiness and pave the way for a potential bond deal.
Thet added that the country was hoping to open a new stock exchange later this year, with assistance from Japan. The existing over-the-counter market only has two stocks that are traded and volumes are measly.
“We will start slow. The idea is to attract domestic savings and give them a source where they can invest,”