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Quick Facts
- Population:
- GDP (PPP):
- $304.7 billion
- 7.0% growth
- 7.5% 5-year compound annual growth
- $5,832 per capita
- Unemployment:
- Inflation (CPI):
- FDI Inflow:
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Burma’s economic freedom score is 53.9, making its economy the 135th freest in the 2018 Index. Its overall score has increased by 1.4 points, with improvements in scores for the investment freedom, property rights, and judicial effectiveness indicators outpacing a big drop in labor freedom. Burma is ranked 33rd among 43 countries in the Asia–Pacific region, and its overall score is below the regional and world averages.
The government’s reforms to attract foreign investment and reintegrate the country into the global economy have included a managed currency float, operational independence for the central bank, a new anticorruption law, and the granting of licenses to 13 foreign banks. Despite these improvements, living standards have not improved for the majority of people. Reversing the legacy of previous governments’ isolationist policies and economic mismanagement—poor infrastructure, endemic corruption, underdeveloped human resources, and inadequate access to capital—will require a major commitment.
Background
Burma’s slow transition from military dictatorship continued when National League for Democracy leader Aung San Suu Kyi was released from jail in 2010. She now acts as state counsellor and leader of the NLD, which won an absolute parliamentary majority in 2015. Her confidante, Htin Kyaw, was elected president. The army remains a major political force and controls several cabinet portfolios, including defense, border, and home affairs. The pace of economic reform has been slow. Wages remain low compared with those in low-labor-cost Asian rivals. Financial-sector liberalization, fast-growing labor-intensive export industries, and exploitation of new offshore gas fields will encourage growth. Burma remains one of Asia’s poorest countries, and about one-quarter of the population lives in poverty.
Property rights are not well established, and conflicts over land titles are a major concern. The judiciary is not independent. Judges are appointed or approved by the government and adjudicate cases according to its decrees. Corruption is institutionalized, especially among the police, although Aung San Suu Kyi issued an official regulation in 2016 banning civil servants from accepting gifts worth more than 25,000 kyat ($21).
The top individual income tax rate is 20 percent, and the top corporate tax rate is 30 percent. Other taxes include commercial and capital gains taxes. The overall tax burden equals 8.2 percent of total domestic income. Over the past three years, government spending has amounted to 22.6 percent of total output (GDP), and budget deficits have averaged 2.3 percent of GDP. Public debt is equivalent to 35.8 percent of GDP.
During 2016, the construction permitting process and regulations, costs, and procedures related to establishing a new business were improved. Burma still struggles with enforcement of contracts, protection of minority investors, access to credit, and resolving insolvency. Efforts to make public spending more efficient and improve budget transparency have been slowed by the government’s cautious approach.
Trade is moderately important to Burma’s economy; the combined value of exports and imports equals 43 percent of GDP. The average applied tariff rate is 4.6 percent. Nontariff barriers significantly impede trade. The prevalence of state-owned enterprises limits foreign investment. State-owned banks dominate the underdeveloped financial sector. Access to credit remains poor, and the state often requires banks to channel loans to preferred sectors.