Myanmar's economic growth is expected to accelerate slightly to 8.5 percent in the current fiscal year, while inflation is expected to remain at around 6.5 percent, the International Monetary Fund said Tuesday.
Matt Davies, the IMF's Myanmar mission chief, in a statement issued in the country's commercial capital Yangon, said the slight increase of the forecast compare to 8.25 percent in the fiscal year that ended March 31 is mainly due to rising gas production and investments.
Inflation is expected to remain contained at around 6.5 percent year-on-year in the current fiscal, while increasing capital inflows outweigh a widening external current account deficit.
Broad money and credit to the economy will continue to expand at a double-digit rate, he said.
Davies said the Myanmar's economic outlook is "favorable" in general, but he warned of the threat of inflation and large capital inflows that could strain the Southeast Asian country's limited macroeconomic management capacity.
"Fiscal and external buffers remain thin and demand-side pressures on inflation and large capital inflows will strain the still-infant macroeconomic management tools," he said.
The mission chief also highlighted some anxiety about the Central Bank of Myanmar's plan to allow foreign banks, for the first time, to open branches in the country, saying the move will place further demand on macroeconomic policy and stretch scarce supervision capacity.
As Myanmar lacks a modernized regulatory system, stronger supervision as soon as possible would lay the foundation for the development of a sound financial system and would be the key to the expected entry of foreign banks, the statement quoted the mission chief as saying.
Davies visited MyanmarJune 4-17, holding consultations for this year and meeting several ministers and senior officials.
Since Myanmar began to open up to the international community in 2011 following decades of military rule, the country has been seen by the investors as the latest emerging market with impressive potential for economic growth and attracting waves of foreign direct investment.