Myanmar can post six percent economic growth next year if the right reform steps are taken by the government, the International Monetary Fund (IMF) has said.
The IMF estimates that the gross domestic product (GDP) of Myanmar will increase 5.5 percent this financial year. Myanmar could see strong growth if it pursues the necessary reforms to take advantage of its rich natural resources, young labor force, and proximity to some of the world's most dynamic economies, including China and India, Meral Karasulu, IMF mission chief for Myanmar, said.
As part of economic reforms, the government has put in place measures to simplify the exchange rate system. This is supposed to support foreign direct investment and stop the appreciation of the kyat, Myanmar's currency. The reform of the currency system will enable the government to intervene in foreign exchange markets to manage the economy.
In its Asian Development Outlook 2012 released last month, the Asian Development Bank said that the Myanmarese government should accelerate reforms and enhance investment in education, health and infrastructure to ensure sustainable growth which would benefit all the people in the country.
Recent market-friendly reforms, an abundance of natural resources and proximity to China and India are some of Myanmar's big attractions. It also faces significant challenges, including the very real threat of the reform agenda being halted or even rolled back.
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Following the by-elections held in April, which resulted in a resounding victory for the opposition National Democracy Party (NDP) and gave its leader Aung San Suu Kyi a seat in parliament, the US announced it would ease economic sanctions and the EU is likely to follow suit.
But the military continues to control the parliament and so reforms could easily be halted. Reforms and integration into the global economy could lead to a sharp acceleration in Myanmar's growth rate, as has occurred elsewhere in Asia.
Natural resources can be the major advantage for Myanmar. Oil major BP estimates that the country has natural gas reserves of around 11.8 trillion cubic feet. But until more progress is made in reforms, the country will struggle to attract investment.