Myanmar has the potential to more than quadruple its economy to over $200 billion by 2030, declared the McKinsey Global Institute back in 2013.
Should it get a second chance, the international think-tank may want to rethink that.
Similar to Bangladesh, Myanmar, aka Burma, was once seen as Asia’s untapped jewel. And, to be sure, it has also grown by more than 5% a year in recent decades (with the exception of post-crisis 2009 when its GDP growth slowed to 4.4%), much like its neighbour.
But Myanmar also has the unwanted Bangladeshi characteristic of having low levels of foreign investment. In the first half of 2019, foreign direct investment into Myanmar and Bangladesh totalled about $2.3 billion each.
Myanmar is arguably in a better position to continue growing since it is coming off a lower base, with an economy that is about a quarter the size of Bangladesh’s. At current prices, the IMF estimates its total value at less than $35 billion.
Its government debt is also lower and its unemployment rate is only 1.6% compared with 4.4% in Bangladesh.
However, Myanmar’s prospects have darkened since 2017 when the country became embroiled in a humanitarian crisis and was punished with international sanctions.
In August that year, more than 730,000 Rohingya people fled from Myanmar’s northwest Rakhine state into neighbouring Bangladesh after Myanmar forces launched a military crackdown in the region, killing civilians and burning villages and homes.
The Rohingyas are one of several ethnic minorities in Myanmar. Although part of Myanmar, a primarily Buddhist nation, the Rohingyas are deemed closer to Bangladesh because they are Moslem. The Myanmar government has never recognised them as citizens and instead sees them as illegal immigrants from Bangladesh.
So unsurprisingly, the UN has described the Rohingya crisis as a “textbook example of ethnic cleansing”.
Earlier this month, the European Union warned that it would remove Myanmar’s trade preferences and limit its access to the world’s largest economic blog, extending the economic sanctions already imposed on certain military leaders.
Such sanctions could prove detrimental to Myanmar’s economy given the EU is one of its main export destinations. The World Bank has estimated that losing EU access could cause the country’s GDP to fall by 0.6% percentage points.
Myanmar is more dependent on foreign trade than Bangladesh, which has an economy increasingly driven by domestic consumption as internal wealth grows. Its exports accounted for 22.6% of its GDP in 2017, significantly higher than Bangladesh’s 13.7%. At 31.4%, Myanmar's imports as a percentage of GDP are also much higher than Bangladesh's (20.2%).
International sanctions aside, Myanmar continues to struggle with deep-rooted problems that keep it away from international markets. They include the lack of a sovereign credit rating, thin foreign exchange reserves and the economy’s heavy reliance on the oil and gas and garment industries.
Critics worldwide have been calling for Aung San Suu Kyi, Myanmar’s prime minister and erstwhile democracy icon, to be stripped of her Nobel Peace Prize. In a similar way, the country's economic prospects have also been tarnished.
To support its growth by 2030, McKinsey Global Institute estimated that Myanmar would need a total investment of $650 billion, a figure deemed unreachable without foreign participation.
But as the country shows signs of drifting back into military dictatorship, just three years after a civilian government was formed in 2016, that projection now looks further than ever.