Despite sharing a 2,100km porous border with China, Myanmar reported its first confirmed coronavirus case relatively late on 24 March.
Even as of 12 May, the country’s confirmed number of cases stands at 180, which is considerably lower than in neighbouring countries. However, experts warn that this may be because of the low number of tests being carried out in the country, with the current tests per million population hovering at just over 200, similar to many African countries, but way far than neighbouring ASEAN member countries.
However, despite the low number of cases in the country, the IMF has revised down economic growth in the country to 1.8% from an earlier forecast of 6.6%. The Asian Development Bank has a more optimistic growth figure of 4.8%, following a growth of 6.8% in fiscal year 2018-19.
This deceleration will reflect weaker investment from European and the US coupled with a slowdown in tourism and export receipts. The decline in garment exports and tourism are also driving up unemployment, which coupled with lower remittances from expatriates would likely lead to weakening household consumption.
In order to mitigate the economic hardships due to the Covid-19 outbreak, the Myanmar Government is pushing ahead with its Covid-19 Economic Relief Plan (CERP). The CERP will focus on improving the country’s economic activity through monetary and fiscal stimulus by providing assistance to workers and households and support for the small and medium enterprises through increased financing and investments.
In order to fulfil these initiatives, the CERP has seven key goals:
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- Improving the macroeconomic environment through monetary stimulus
- Easing the impact on the private sector through improvements to the investment, trade and banking sectors
- Easing the impact on labourers and workers
- Easing the impact on households
- Promoting innovative products and platforms
- Healthcare system strengthening
- Increase access to Covid-19 response financing (including contingency funds)
Before the announcement of the CERP, the government had announced several steps to mitigate the economic hardships for the economically weaker class. This included providing food to households without regular income, concession on electricity charges, and deferments of loan repayments. For the business class, the government’s steps included license fee exemptions for traders and hoteliers and low interest rates loan for small and medium enterprises, garment manufacturers and the companies involved in tourism sector.
Prior to the Covid-19 outbreak, the Myanmar construction industry had expanded by 8.1% in 2019 and GlobalData had forecasted an acceleration in growth to 9.1% in 2020. This was mainly due to increases in foreign investment in the country, with manufacturing, transport & communication, real estate development, power sector and hotel and tourism industry garnering most of the foreign direct investment (FDI) in the country.
Automotive companies such as Toyota, Suzuki, Nissan, Hyundai, Kia and Ford have either established or are in the process of establishing production or assembly plants in the country. But in view of the current global depression in the short term, most of the companies are likely to halt their current investment plans till the global economy recovers. Consequently, investments in the industrial and commercial sectors are likely to be disrupted in the short term.
Moreover, as unemployment rises and disposable income tapers off, this would also affect growth in the residential segment. In view of these developments, GlobalData now expects growth in Myanmar’s construction industry to decelerate to 3.7% in 2020, with a high likelihood of further downward revision in the short term in case the conditions deteriorate further.