Its emergence from decades of economic stagnation and its location bordering India and China means Myanmar has great potential to rapidly expand its economy, researchers at McKinsey & Co. say in a report to be released today.
The country of 60 million people could achieve a gross domestic product of more than $200 billion in 2030, more than four times this year’s likely result, according to the McKinsey Global Institute, the consultancy firm’s research group.
“For much of the 20th century, Myanmar largely missed out on the spectacular growth seen across most of the global economy and most recently in its Asian peers,” Richard Dobbs, a McKinsey director, said in a statement. “It now has the potential to be one of the fastest-growing economies in emerging Asia.”
Total spending has the potential to rise to $100 billion by 2030, from $35 billion this year, as the number of “consuming class” members rises to 19 million, from 2.5 million. Its proximity to China and India gives it access to large markets.
Myanmar has in recent years established a civilian government after long being ruled by a military junta, and has increased transparency and established special economic zones.
But the Myanmar government faces challenges in realizing its economic potential, McKinsey said in its report, titled “Myanmar’s Moment: Unique Opportunities, Major Challenges.”
Challenges include achieving macroeconomic stability, expanding access to education and training, strengthening the financial system, making it easier to do business, building infrastructure and ensuring security.
Myanmar’s GDP is just 0.2 percent of Asia’s total GDP — equivalent to that of cities such as New Delhi, Auckland or Johannesburg, McKinsey said.
Labor productivity is 70 percent lower than that of Myanmar’s neighbors, and the population has an average of just four years of schooling. Just 4 percent of Myanmar’s population has enough income for discretionary spending, compared with 35 percent for the global population, the report said.
Many companies across Asia have recently established operations in Myanmar, seeking to benefit from the liberalization of the nation’s economy.
Semen Indonesia is investing $200 million in a cement plant in Myanmar and it expects to start construction next year.
China National Petroleum Company has completed six oil storage tanks on an island off western Myanmar from which two pipelines will carry fuel to China, and will soon finish six more, Reuters reported on Tuesday.
Aside from economic, political, and governance issues, Myanmar also needs to consider digital technology to develop its economy, McKinsey said. Advancement of technology in education could help Myanmar, which has an average of 30 students from every teacher.
The researchers warned that the country needed to break its economic dependence on agriculture, instead developing its manufacturing sector.
The nation’s development has recently been hit by ethnic tensions between Buddhist and Muslim populations.