Inflation Forecast to Hover Around 9% if Market Reforms Continue
Burma’s rate of inflation will stabilize at about 9 percent “in the medium term,” a financial assessment of the country has forecast.
Although food price pressures will ease with the secondary harvest, inflation will continue speeding up throughout this year, said Mantis, a Netherlands-based economic forecasting company specializing in frontier markets.
Inflation will be driven by consumer price increases and depreciation of the kyat, said Mantis.
Investment inflows worth about 9 percent of gross domestic product (GDP) in the first quarter of 2014 “came just in time to help finance the country’s highest merchandise deficit ever, which reached 7.3 percent of GDP” in the quarter.
“While imports remained elevated, exports dropped to 12.5 percent of GDP in 2014Q1, down from their peak of 21 percent in the previous quarter and somewhat below their five-year average of 15.5 percent. We expect the drop in exports to be of a temporary nature and thus the merchandise deficit to moderate soon,” Mantis said.
“Myanmar’s complex socio-economic transition process entails large uncertainties. If the reform momentum accelerates, investment inflows may strengthen, leading to appreciation of the currency,” the assessment said.
“On the other hand, if financial markets are not liberalized or the government resorts to borrowing from the central bank, there will be faster depreciation of the kyat.”
India, Burma Plan a Large Power Plant to Aid Cross-Border Trade
India and Burma are negotiating to jointly build a 400-megawatt power plant in Sagaing Division close to the border between the two countries, Indian media reports said.
Financial support and equipment would be supplied by India’s Manipur State, said The Times of India, reporting on a meeting between the two sides at Tamu this week. [...]
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