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- GDP (PPP):
- $89.5 billion
- 6.3% growth
- 5.2% 5-year compound annual growth
- $1,405 per capita
- Inflation (CPI):
- FDI Inflow:
Burma’s economic freedom score is 46.5, making its economy the 162nd freest in the 2014 Index. Its score is 7.3 points better than last year due to positive changes in investment freedom, business freedom, and labor freedom. Burma is ranked 36th out of 42 countries in the Asia–Pacific region, and its overall score is much lower than the regional average.
Over the 20-year history of the Index, Burma’s progress toward greater economic freedom has been patchy and modest. The overall score improvement has been merely 1.4 points, with gains in trade and monetary freedoms offset by deteriorations in four of the 10 economic freedoms including property rights and financial freedom, the scores for which have declined by 20 points each. Burma has been considered a “repressed” economy throughout the history of the Index.
Offering some hope for the future, a number of notable changes in Burma’s economic environment have occurred since the second half of 2011. Economic sanctions have been eased or lifted, and a new foreign investment law, which permits foreign firms’ full ownership and eases restrictions on land leases, has been enacted.
Burma has been a military dictatorship since 1962. Since 2010, it has pursued limited political and economic reform, including releases of political prisoners, relaxation of media censorship, limited labor protections, and exchange rate reform. National League for Democracy leader and Nobel Peace Prize winner Aung San Suu Kyi was released from jail in November 2010 and won a seat in parliament in 2012. The United States and the European Union have responded by lifting or relaxing sanctions, but recent outbreaks of violence against ethnic minorities have led many to urge caution before fully embracing the government. Burma is richly endowed with natural resources, but government intervention in the economy has made it one of the world’s poorest countries.
Although the government has promised to pursue a course of political and economic liberalization, corruption remains pervasive and continues to be a serious barrier to sustained economic development. The strengthening of the enfeebled judiciary and the introduction of rule of law have been painfully slow. Private property is not protected. The Burmese military has yet to be held accountable for human rights violations.
The top individual income tax rate has fallen to 20 percent, and the corporate tax rate remains at 30 percent. Other taxes include a commercial tax and a capital gains tax. Overall tax revenue is estimated at just under 4 percent of GDP. Opposition leader Aung San Suu Kyi has called for tax reforms as the government opens up the economy. Public expenditures have grown to 19 percent of GDP, and public debt continues to be below 50 percent of GDP.
Inconsistent enforcement of laws and bureaucratic red tape hinder the development of a critically needed private sector. The formal labor market remains distorted by state intervention that sets public-sector wages and influences wage-setting in the market. The government administers electricity prices, subsidizes fuel, sets public and some private wages, and imposes other distortionary prices (for example, for rice).
Burma’s average tariff rate is 3.2 percent. Numerous non-tariff barriers further impede trade. Many state-owned enterprises remain in operation. A new law governing foreign investment enacted in 2012 allows foreign investors to maintain up to 100 percent ownership in some cases. The underdeveloped financial sector is dominated by state-owned banks. Access to credit remains poor, and the state often requires banks to channel loans to preferred sectors.