As Myanmar emerges from the wilderness and opens up to the rest of the world, a new Economist Intelligence Unit (EIU) report finds that business opportunites abound in the country but warns this should not lead to a goldrush.
“The whole world is watching Myanmar at the moment, with the central question being whether meaningful political reform will follow the liberalising gestures we have already witnessed," says Manoj Vohra, Director of Custom Research, Asia Pacific, EIU.
Vohra adds that as ties with Western governments thaw, there is now a high probability that sanctions and other restrictions on trade and investment will be lifted over the coming months.
Foreign investors are anxious to capitalise on the opportunities presented by an emerging country with 60 millions people and vast untapped resources, according to Vohra.
"The potential is clear but this should not be a goldrush. Myanmar has a long way to go and it remains a volatile and high-risk market,” says Vohra.
In the report, the Economist Intelligence Unit (EIU) presents three possible scenarios for Myanmar’s growth trajectory until 2020, and the accompanying assumptions and risks under which each would unfold.
Under the core scenario (60%), which assumes that the military-backed Union Solidarity and Development Party (USDP) maintains its grip on political and economic power while orchestrating superficial reforms to win international legitimacy, GDP growth for the period 2016-2020 will rise to an average of 7.7% per year (up from 4.4% in 2011).
Under the golden-era scenario (25%), which assumes that Myanmar takes meaningful steps towards genuine democratisation and structural economic reforms are carried out in consultation with multilateral financial institutions, GDP growth could rapidly accelerate and average as much as 8.5% per year during 2016-2020.
If Myanmar were able to maintain that growth rate for eight years, the size of its economy would simply double, says the report.
However, there is still a chance that dark forces (15%) will prevail, in which case Myanmar’s economic growth could actually slow in the coming years, averaging only 4.4% during 2016-2020. Under this scenario, the military reverts to type and economic growth remains narrowly based.
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